Stores step up same-day delivery

Retailers use shops as warehouses; firms vie to transport

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Stephen Kling is a devoted Amazon.com shopper, but lately he's been lured back to big-box retailers, buying items from Target and Office Depot.

The reason? He can get same-day delivery.

Using a smartphone app from eBay, the San Francisco corporate trainer can order products from a variety of bricks-and-mortar retailers and get the items hand-delivered to him that same day, often within an hour. Last month, he ordered a $250 Nexus 7 tablet computer, and it was delivered to him within 30 minutes … at his barber's shop.

The eBay Now pilot project -- partnering with the likes of Macy's, Target and Best Buy -- was launched in August. A customer orders an item on a smartphone, and an eBay valet personally delivers by the end of the day for a $5 fee. The first three deliveries are free. The service was expanded to New York in November.

"It was awesome," said Kling, 30. "I'm normally addicted to online shopping, but it literally took just 30 minutes from when I ordered the Nexus to when the concierge delivered it. I was still sitting in my barber chair."

It's all part of an effort by bricks-and-mortar chains to keep up with Internet rivals such as Amazon.com. Retailers weary of constantly competing mostly on price are testing same-day delivery to woo impatient shoppers this holiday season.

"It's going to work (best) in an urban area where stores are very clustered together, and items can be delivered very fast," said Brian Sozzi, chief equities analyst at research firm NBG Productions. "If I order something from my house, and the local Walmart is 10 miles away, that's going to be challenging."

This week, the U.S. Postal Service begins an experiment in San Francisco. It's partnering with 10 retailers, which have yet to be announced, to offer same-day delivery around the city, said spokesman John Friess.

Some companies are rushing to be middlemen between retailers and their shoppers. Postmates, a San Francisco company founded in 2011, guarantees delivery within the hour from more than 4,000 merchants throughout the city using 150 couriers armed with smartphones. The company said it hopes to expand to other cities soon.

"It works like a remote control for your city," said Chief Executive Bastian Lehmann. "You press a button, and (in) under an hour, the item that you so desire is in your hands."

This fall, Wal-Mart rolled out same-day delivery for popular holiday items, such as toys and sporting equipment, in four markets. Shoppers are required to order online by a deadline, then pick a time slot for delivery later that day for a $10 fee.

Ravi Jariwala, a Wal-Mart spokesman, said same-day delivery was a natural progression for Wal-Mart, which found through surveys that most of its shoppers would consider using same-day delivery. Many would use on at least a monthly basis.

"If you want to shop Wal-Mart and are in a pinch and need something right away, this is a great option," he said.

The goal is to win at e-commerce by creating "a deeper relationship with the customer," he added.

That's something Amazon.com, which has won over many shoppers with its popular Prime two-day delivery program, is well aware of. It has been offering same-day delivery in select markets since 2009. To reduce shipping times, the e-commerce giant has been rapidly building distribution centers across the nation.

But Chief Financial Officer Tom Szkutak recently denied rumors that Amazon planned to offer the service on a wider scale.

"We don't really see a way to do same-day delivery on a broad scale economically," he said.

That means struggling big-box retailers might be able to stake a claim on super-fast delivery by using their bricks-and-mortar stores as warehouses, said Sozzi, the analyst. "These stores have to have some shot of competing with the likes of Amazon because they really can't compete on price, so if they can find some way to get a TV to you literally on the same day you order it from your mobile phone while picking up your kids from school, that tosses the ball back to Amazon to pick up its game."

Toys R Us so far has not tried its hand at same-day delivery. But Chief Executive Jerry Storch said the company is exploring how to offer the service and pointed to the chain's 850 locations as crucial to getting goods to shoppers quickly.

"Our stores are everywhere, and that is what makes same-day delivery possible," he said. "Same-day delivery will happen, and it will happen to all major retailers, and it will happen primarily from stores."

Cities shape offerings

In San Francisco, eBay uses a stable of 50 valets on bikes and in cars to deliver items from a variety of national retailers.

"They can bring the new sweater to you when you're in a park, and you are suddenly cold, which has happened," said eBay spokeswoman Lina Shustarovich. "There was a dad who realized he was supposed to pick up a costume for his kid after work, and instead he went to get a drink. So the costume came to the bar."

She said that each market poses its own unique transportation problems.

"San Francisco is hilly and big, so most valets drive cars. In New York, most are on bike and foot because the subway system is so comprehensive," she said. "The method of delivery is completely different depending on the city."

Chris Souza, a San Francisco marketing specialist, has used the service to get paper towels and laundry detergent without leaving his home. While "it was a really cool experience," he said he'd have to think carefully before getting charged the $5 delivery fee.