Home Depot expands speedy delivery
The Home Depot has rolled out express same-day and next-day local delivery for more than 20,000 of its most popular items to 35 major U.S. metro areas, part of a five-year expansion of its delivery offerings.
The delivery option, made possible, for smaller items, through partnerships with delivery companies like Roadie and Deliv, starts at $8.99, the company said in a press release. Customers choose "Express Delivery from Store" online or through The Home Depot app.
Larger items will be delivered thanks to an ongoing expansion of its supply chain network, the company said. That ongoing investment entails the addition of more fulfillment centers and more than 100 new distribution sites, according to the release.
Home Depot joins Target, Walmart and, of course, Amazon in stepping up same-day and next-day deliveries. Mark Holifield, the retailer's executive vice president of supply chain and product development, in a statement called the new option "just the beginning" and "a significant milestone in the way we're serving customers."
It's unclear that there's really a consumer imperative for such options, however, according to recent research from Moody's Investors Service emailed to Retail Dive. Such speedy delivery is a way for online (or omnichannel) retailers to match the ability of brick and mortar to get items in the hands of shoppers as close to instantly as possible, Moody's noted, adding, "The last mile remains the key battleground in the brick-and-mortar versus online campaign."
But the last mile has also proven to be expensive for all retailers attempting to solve it for online orders, and, as Moody's notes Amazon is no exception. In physical stores, customers themselves take care of all aspects of the last mile, from taking down items from shelves, getting them through checkout, loading them in the car and driving them home.
"Retailers are at risk of overspending," Moody's Lead Retail Analyst Charlie O'Shea warned in the report, noting that it's hard to know how "loudly … consumers actually clamoring for same-day delivery and how much are retailers investing in what we view as a costly initiative. Finally, it is unclear how much of the ultimate cost of same-day delivery consumers will be willing to 'subsidize.'"
Moody's report suggests that retailers haven't yet found the sweet spot when it comes to how much to charge customers for the instant gratification that same-day or next-day delivery provides. For big-ticket items, the extra $7 that Target's TriBeCa NY store charges for same-day shipping is a "decent deal," Moody's said — and the same may be true of Home Depot's new $8.99 option.
"But for all of these programs, it is less clear at which purchase level the consumer will recognize that there is in fact a compelling value proposition for the service," the Moody's report noted. "Until this happens, it looks like the U.S. consumer will benefit from this ongoing battle for same-day delivery leadership, which could very well result in a Pyrrhic victory for the ultimate 'winner.'"
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