- May 18th, 2015
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Delivery as Battleground: Uber, Nordstrom and Macy’s Take Arms, and Armanis
Living mannequins have their place, but few events translate to pure retail progress like a pair of Louboutins arriving by Uber.
Chauffeured shoes, and other goods, are part of an expanding retail trend designed as much in the name of customer service as in merchant one-upmanship. Uber, the app-based transportation network, is partnering with upscale retailers to launch a same-day merchandise delivery service. Hundreds of merchants are reportedly in talks or testing the program, including Neiman Marcus, Louis Vuitton, Hugo Boss and Tiffany & Co., according to TechCrunch, which obtained a training manual.
While curbside diamonds may spell progress, such advancements also have the potential to upset the market dynamic. Depending on how major merchants respond, on-demand delivery – which granted is being tested in various forms – is likely to usher in another herd-thinning era for retailers.
In a way it is a natural progression. I recently wrote about the efforts retailers are making to find the pricing sweet spot among discount-conditioned consumers. Now fulfillment is in fashion, with an increasing number of retailers folding fast delivery into the value-equation mix. Nordstrom is testing curbside pickup, Macy’s is trialing same-day delivery in major cities, and Amazon is chasing drones.
In doing so, they officially raised the question of whether delivery is the next major retail battleground. If so, it was natural for Uber to follow. Where the trend will lead, however, is in the hands of all of the above.
What steers Uber
This consideration of the many players introduces wrinkles, and with them a reminder that a natural progression is also a Darwinian one. Let’s not overlook the effect Uber delivery may have on the traditional benefactors of online retailing, such as UPS, FedEx and the U.S. Postal Service.
Uber itself detected several environmental conditions to which it would have to adapt in order to survive the merchandise delivery business, according to TechCrunch:
“Uber’s original plan for merchant delivery focused on large e-commerce retailers like Amazon and eBay, but found that sourcing inventory from warehouses wasn’t worth the effort. Getting inventory from local stores, on the other hand, is possible as long as the vendor has control over the amount and type of inventory available in a single day.”
Uber is attempting to puzzle a way around the troublesome inventory issue (as long as the merchant has control over the inventory), but what of the products that do not move? For gold-plated merchants like Neiman Marcus and Louis Vuitton, which tend to have more tailored selections, such inventory control is manageable. The middle-pack merchants, however, will have to devise their own strategies not only to deliver on demand, but also to manage such delivery costs.
I can just picture the promotions now: Order standard delivery and get 30 percent off!
Which leads to retail’s version of natural synthesis – data, and those who analyze it.
Moving data to the front seat
In particular, just-in-time delivery requires a de-isolation of data, according to Brett Wickard, founder and president of FieldStack, which specializes in lean retail practices.
“Same-day delivery services will further increase the gap between the modern retailers who have appropriate technology to handle new sales channels and those still saddled with technology from last century,” Wickard recently told Retail Dive.
“By seamlessly balancing the real-time data from e-commerce, supply chain and brick-and-mortar retail, the lean retailer can more precisely forecast the inventory needs same-day delivery will place on their locations,” he said.
To accomplish this, the retailer will have to release its data across every department so the entire organization can benefit. We in marketing have a term for the practice of sharing loyalty program data beyond the marketing department – enterprise loyalty – and it can help shape critical decisions from store layout to pricing.
Appraisal of the fittest
The data is clearly already at play, and pointing out strengths and weaknesses, including cost. Consider Nordstrom’s fresh foray into clothing conveyance. In April it began testing curbside pickup for merchandise ordered or reserved online. Jamie Nordstrom, who oversees company stores, told The Seattle Times the system is working fine now but conceded the holidays could get tricky.
Macy’s, like Uber’s partners, is seeking same-day delivery through a third party, Deliv, which connects a network of drivers through a digital app (like Uber). Macy’s charges $5 over standard delivery. Amazon, meanwhile, is fitting in with one-hour delivery, at $7.99.
Which leads to the one factor that may determine quick delivery’s survival. A fast flight of fancy (or Ferragamos) comes with a price, and many consumers are not willing to pay it. However, if data analysis and technology continue to enable same-day delivery, it will likely progress until the consumer believes it is a necessity (similarly to the pull of Apple products). By then, the cost will come down, at least for the fittest of the herd.
And by then, who knows? Maybe the next major turn in retail evolution will be in full swing. Why wait for delivery, when my Tom Ford sunglass frames can come via 3-D printer?
This article originally appeared on Forbes.com, where Bryan serves as a retail contributor. You can view the original story here.