As near real-time delivery attracts retailer interest, particularly following a surge in Covid purchases in online sales, Shipt is warning the industry that super-fast delivery (in less than 15 minutes) is actually the wrong approach. Shipt, which is owned by Target, is widely used in the United States for same-day and next-day delivery, with many retailers offering service within two hours. The company is redoubling its efforts on its basic philosophy which is personalized shopping and quality service.
Same-day delivery stays loyal to customers
Rina Hurst, Chief Commercial Officer of Shipt, is clear on the approach retailers should take and spoke about it at Shoptalk, a recent industry event. Hurst said same-day delivery was first seen as a luxury feature before the pandemic and then became critical throughout the pandemic. She said: “We are now seeing that same-day and next-day delivery sticks with consumers.”
However, Hurst further explained that while the speed variable has evolved over the past few years from weeks to days to same day, super-fast delivery is not advancing at the same pace. “Only 50% of orders call for delivery within an hour,” Hurst said. Even with some partner grocery stores, the majority of orders are requested within the hour. For example, 57% of Winn Dixie orders placed with Shipt are for the next hour.
Speed is not a primary consideration in delivery
According to a recent consumer survey, quick delivery ranks sixth among the most important factors for grocery delivery. Low or no shipping costs were ranked first, followed by item price and product availability.
Shipt doesn’t focus on super-fast delivery models but thinks about same-day and next-day delivery in terms of balancing speed, quality, and cost. Hurst said, “It’s like a three-legged stool and we look to balance all three factors and it really comes down to which customer is being served and what’s most important to them.”
Hurst explained that Shipt customers often use the service to source large baskets, placing more than 20 orders a year, with an average basket size of around $100, three times that of ultra-high-speed delivery services. fast. Hurst said, “We just don’t see the use case for super-fast delivery within our customer base.” While customer demand in urban markets, especially for food delivery, certainly makes more sense since the market is denser, super-fast service is very expensive.
Instant delivery is very expensive
While many small start-ups have jumped on the instant delivery bandwagon and secured funding to spur what appears to be a consumer trend, most are falling flat with operating costs making the business model a proposition. loser. In the first seven months of 2021, investors injected $10.1 billion into grocery businesses, compared to $7 billion in all of 2020. Jokr, a grocery delivery startup founded in 2021 , been lose $159 per order in New York and other operating companies like Fridge No More were suffering similar losses. Many instant delivery startups are reducing their services or increasing delivery times to minimize high operating costs.
Big companies like DoorDash or Instacart may be able to survive in the space of super-fast delivery based on economies of scale, but even so, Shipt takes a different approach. Hurst said: “At Shipt we think a lot about quality and it’s central to the equation of every decision we make. Quality is our secret sauce. After quality, the second most important consideration for consumers is that the service meets the delivery time commitment.
Most customers choose same day rather than hourly
When it comes to non-food products, delivery in less than 15 minutes is even less of a priority for consumers. For example, according to Shipt, 76% of Party City delivery orders are placed more than three days in advance because most consumers plan parties in advance. Hurst said: “The most important factor is delivering to customers within the time promised and we just don’t see a growth in service requests for super-fast delivery.”
What Shipt sees and hears from its customers is that personalized service is a key driver for loyal users. With a new featured shopping program, Shipt users can select a personal buyer they want to favorite. Hurst told a personal story about her favorite shopper who called her when the milk ran out on the grocery list. “He really saved my day and it’s great to have that type of serve.” Shipt’s personal buyers will often find suitable substitutions 60% of the time when faced with an out-of-stock situation. This keeps customers happy and saves the sale for the retailer. High-end personalized service is a key consideration for loyal customers.
Shipt bets on personalization
With several delivery brands pushing for super-fast delivery speeds, Shipt is instead banking on personalization and high-quality service as key drivers of customer success and loyalty in the personal shopping space. The buzz around the industry is lightning fast and the “need for speed,” but Shipt isn’t betting on that for long-term customer satisfaction. Shipt’s extensive expertise in shipping and last mile delivery, along with feedback from its customers, shows that same day delivery and ordering ahead is what is needed to support today’s market.