Ding-dong: Digital Delivers on Demand

by / Thursday, 11 July 2013 / Published in E-Commerce, Online Retail / Interactive Merchandising, Strategy
You never have to leave the house again.

Slight correction. You never have to leave the house again if on a Tuesday night at 7pm you realize you’re about to run out of toilet paper. Or if you crave Trader Joe’s cinnamon almonds immediately.

Actually, if you’re out of the house maybe you need a cell phone charger delivered to the bar where you’re having a beer. While you’re having that beer.

Digital has you covered.

Instacart. Safeway.com. Google Shopping Express. AmazonFresh. eBayNow. Munchery. Task Rabbit. Etc. Take your pick. (There are more picks if you live in the Bay Area or New York City.)

When it comes to digital shopping, on-demand delivery is the new free shipping. In fact, it’s often both as early players waive delivery charges in order to incent folks to trial. Order your heavy and awkward items now.

The milkman, restaurant delivery and online shopping have converged to offer unparalleled convenience.

This isn’t new. Remember Kosmo.com? Small goods delivered by bike within an hour. Usually by a sweaty person (I lived at the top of a hill). They had $250M in investment, including $60M from Amazon. Webvan. $1.2B valuation post-IPO.

The inflated dollars involved detract from the fact that some of these companies were ahead of their time. Others did have fatal flaws. Wow those were big dollars.

Netflix, Hulu and other content providers are all over on demand. Order online, pick up in-store is on the rise. But the wave of on-demand delivery services I’m talking about feel personal. They have a wow factor (for now).

Especially if someone delivers your items within an hour of ordering.

Shop via digital and people run around in the real world for you. Immediately. They show up on your doorstep. When you want them to show up. With what you ordered.

On the surface this is quite simple. It’s an advanced courier service. Those offering it know it’s not simple. Either way it’s awesome.

Why will it succeed? As I snack on pretzels from Safeway.com, I see a few reasons:

– Convenience carries value. In this era of showrooming and price comparing, people are still willing to pay for convenience. Saving time and simplification have inherent value. New Yorkers know this. It’s why you can get anything delivered to anywhere for the right price in Manhattan. Woe the inflation for those living in a 3rd floor walk-up.

– Instant gratification is a competitive advantage. Amazon has upped the ante. Competing with Amazon on price is a losing battle for a lot of retailers. Fast, often local, delivery opens up a whole new playing field.

Now Amazon also happens to excel at delivery. Their potential disadvantage? The increased perception of Amazon as Goliath, in a time when people are cheering for David. Google Shopping Express is working this angle by engaging retail partners local to their consumers.

– Automating repeat purchases is a relief. There are certain mainstay items that we all buy consistently. The bulk items from Costco. Toothpaste. Diapers. Milk. Our shopping list staples. These are well suited for subscription style ordering or for instant need delivery.

Using algorithms digital will be able to predict when we need to replenish. Brands like Google and Amazon may even know it before we do.

– The best shopping involves great customer service. These services feel like a one-to-one relationship. Texts indicate arrival times. Emails confirm delivery and satisfaction. Newness holds a humility that invites honest feedback. Delivery involves an in-person interaction. We feel like we’re in this experiment together. And we are. Great customer service will set experiences apart.

The big players have the advantage of being able to take a monetary hit as they beta test. The small players keep it local and fuel the desire to aid small businesses.

As on-demand delivery goes big there doesn’t need to be a winner. Well, the customer needs to be the winner. But when it comes to actual product delivery there is lots of opportunity in how this service expands.

It’s going to be fun to watch it play out. Or even better, at Fluid, to play a roll in defining and influencing how it evolves.

I think I hear my doorbell ringing…


PS. Instacart announced an $8.5M Series A round with Sequoia Capital today. Sequoia was an original investor in Webvan – which their Chairman references in a great way.