For you young’uns out there, it might be difficult to imagine what a big deal it was when Federal Express emerged on the scene, offering affordable overnight delivery of documents and packages.
Here’s one way to get an understanding: “FedEx” (the contraction of the corporate name) became, for a time, a generic term in common usage, much like Kleenex, Scotch tape or Realtor. “You need that report right away? I’ll FedEx it to you.”
Here’s an even better way: Take a look at all the companies that, despite the challenges, obstacles and expense, want in on the delivery business.
The latest to take the plunge is the discount department store retail chain Target, which last week announced an affiliation with Shipt (self-described as an online marketplace) to offer same-day delivery of grocery items, household and health-and-beauty products, electronics, toys and other stuff in Northwest metros, including Tacoma, Seattle, Spokane, Portland, Eugene and Boise, starting later this month.
Target says that by the end of this year it will offer delivery service in about 180 markets, and by 2019 delivery will cover all major product categories.
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The reaction to this news is not so much “Wow, that’s cool!” as “Why so late to the party?” Everyone’s in the delivery business, either on their own or through partnerships with service providers such as Instacart. Grocery store chains have been immersed in competitive battles over delivery for years. Now other types of retailers are getting into the game.
The obvious culprit is Amazon which, not content to sell anything and everything, wants to get anything and everything to you not in days but in hours. And if it has to do that itself, it will, hence the fascination with drones. In an example of a “if you can’t beat ‘em, join ‘em” collaboration, locally based retail chain Bartell is offering free two-hour delivery (or one-hour delivery for $7.99) through Amazon’s Prime program.
The roots of delivery fever go way back, to the days when the big downtown department store, the corner grocery and the mail-order catalog all offered delivery-to-your-home service (even if, in the case of the catalog, delivery was measured in weeks). Ice, milk, bread, coal and other essentials would come to you.
Suburbanization, the ubiquitous car and retail consolidation flipped that around for most consumer items, so that the customer would go to the store. Delivery was limited to the biggest and bulkiest stuff – appliances, furniture and mattresses – that wouldn’t fit in a car.
FedEx changed a lot of thinking about delivery. It was no longer necessary to wait days for a document or item when it could be “overnighted” – there’s another word introduced into the lexicon about that time.
Concurrent with that development was the emergence in the business world of the just-in-time operating model. No longer would companies carry warehouse-sized inventories of supplies and raw materials; instead they’d expect the vendors to deliver what was needed when it was needed.
Those expectations spilled over into the consumer market, to the extent that many now want the convenience of near-immediate delivery for virtually anything they might buy.
That, and the flurry of announcements such as that from Target and Shipt, raises some interesting questions about the future and sustainability of delivery. It makes sense that you want your pizza to get to your door now; you’re hungry and you want it in edible condition (i.e., not cold with a topping of congealed cheese).
But does everything, to borrow the marketing tagline FedEx used for years, absolutely positively need to be there overnight – or in the next hour or two?
And if it does, how much is that worth to you?
Delivery is neither cheap nor easy. The dot-com bust claimed several companies – remember Webvan or Kozmo – that tried to build businesses with fast delivery as the core feature, and failed to do so. Delivery requires trucks, drivers and systems for receiving and processing orders. Those drones don’t come cheap, never mind the regulatory hurdles to be overcome. (If you think self-driving cars are a thorny technology to develop, wait until everyone wants to fill the air with package-delivery drones.)
But such are the competitive pressures and consumer expectations that just about every business figures it has to get into delivery, if for no other reason than everyone else is already doing it. That means a lot of money is going to be burned and some companies will drop the service or fold entirely.
It could also turn out that consumers aren’t as enamored with instant delivery as business believes them to be. When confronted with the bill for next-hour or same-day service, they might get comfortable saying, “Nah, that’s OK. Take your time.”