Macy's expands same-day delivery to challenge Amazon

Dive Brief:

  • Macy’s is expanding its same-day delivery pilot to nine more cities, the company said Monday, bringing the total to 17 markets. In some markets, the service is available at Bloomingdale’s as well as at parent retailer Macy’s.

  • The new same-day delivery markets will expand to Atlanta, Boston, Dallas, Honolulu, Las Vegas, Miami/Fort Lauderdale, various areas of Long Island and Manhattan in New York, Orange County, CA, and Philadelphia. Same-day delivery will continue in Chicago, Houston, Los Angeles, areas of New Jersey, Seattle, the San Francisco Bay Area, and Washington D.C. 

  • Same-day delivery startup Deliv is powering the retailer’s same-day delivery service, which has also expanded to returns.

Dive Insight:

Macy’s is hardly a big risk-taker, so when it expands same-day delivery in double the number of markets, you can bet that its trial run was a successful one. It’s one of the stronger indications out there that same-day delivery has legs. With its major client Macy’s on the move into more markets, Deliv itself will also be able to expand with other retailers in those places.

The expansion to 17 markets trumps even same-day delivery pacesetter Amazon  the e-retailer is currently offering same-day delivery in 14 metro areas. But Reuters reports that Amazon contractor LaserShip, through a recent acquisition, has plans to increase its coverage to five new markets. In this battle, Macy's has an advantage with its over 900 locations in the U.S. that can act as mini-distribution centers, thus decreasing shipping costs by cutting down delivery time. Comparatively, Amazon currently has only 50 fulfillment centers in the States. 

Still, it does remain to be seen whether the service can continue on its $5 per delivery markup. (Amazon's delivery is free to Prime members. Then again, Amazon has shown that it's willing to forgo profits; Macy's hasn't.) Delivery services are increasingly under pressure to evaluate how their workers are treated, with regulators in several states and the federal government recently indicating that many  of them should be compensated as employees and not contractors. 

Delivery services Shyp and Instacart, in fact, have taken care in recent months to move all or some of their drivers to employee status. Shyp says it's not so much pressure, but that the move allows the company to work on a more comprehensive growth strategy. In any case, that adds to the cost of delivery, and at some point, that means the customer may have to pay more. 

If same-day delivery fees were to rise, its popularity might fall. Right now $5 is an attractive price point for customers; we don’t yet know what point is unattractive. And delivery services like Kozmo went bust because their too-good-to-be-true delivery fees were simply unsustainable

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Filed Under: Logistics
Top image credit: Macy's