Amazon has expanded its Prime same-day and one-day delivery to more than 8,000 U.S. cities, and its Prime Now grocery delivery is available in more than 30 cities, the company announced on Wednesday in a press release.
In those areas, the expedited options allow for delivery of holiday orders as late as 11:59 p.m. on Christmas Eve and non-Prime customers can opt for a free trial to have access to Prime's perks for the season.
More shoppers this season are turning to Amazon for apparel. While just 6% consider Amazon a source for apparel, 20% of those who do fail to return and 66% of shoppers "like" or "love" the brand. More than 70% of Gen Z and millennial shoppers have a positive opinion, according to a report from fashion forecasting and data analytics firm WGSN emailed to Retail Dive.
As timing would have it, Amazon's delivery expansion announcement came the same day that Target announced its acquisition of same-day delivery company Shipt for $550 million — both indications of the rising importance of quasi-immediate delivery of online orders.
"Having an 'instant' delivery option, whether it's click and collect or hyperlocal, is tablestakes now for grocers," Michelle Grant, head of retailing at Euromonitor International, said in an email to Retail dive regarding Target’s Shipt deal.
Amazon has arguably set that expectation, leaving rivals to catch up. Walmart, for example, has experimented with having store employees deliver packages on their way home from work. The company also snatched up same-day delivery company Parcel in October and it works with same-day delivery company Deliv in some areas.
Meanwhile, Amazon is encroaching on another Target forte — women’s apparel sales. For now, Amazon sells best in menswear, with basics that require replenishment. But it’s gaining among women, and its strong customer retention indicates the company has a good chance of expanding those customers’ horizons.
From March to October 2017, Amazon showed strong post-conversion customer retention, with 54% making a purchase in the last 12 months, according to WGSN. While it still has a challenge on its hands in terms of unaided awareness, as previously reported by Barometer, WGSN notes Amazon's customer retention numbers indicate that once the company converts it keeps the shopper coming back for more.
"Amazon’s ability to retain its customers is unsurprising given its level of convenience and market penetration outside of fashion. The nature of the platform ensures it has a high number of replenishment shoppers, particularly within the menswear market," Francesce Muston, WGSN’s head of retail, said in a statement. "The challenge for Amazon is to make the transition from repeat transactions of core clothing items into more impulsive trend led purchases."
The challenge for rivals is to head off Amazon’s intrusion. There are strategies they could use, and some come from looking at Amazon itself — such as bolstering search and loyalty programs.
"Amazon Prime effectively drives brand loyalty, yet there are few fashion retailers who offer loyalty schemes which are truly compelling for the customer," Muston said. "Amazon also offers the ability to drill down to a specific product yet many fashion retailers’ search results are too broad. Fashion retailers could also make more of their basics lines to encourage replenishment purchases with push reminders and personalized product suggestions."