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Mobile drives significant expansion in merchant delivery services

May 28, 2013

With consumers increasingly shopping for everything from a new dress to tonight’s dinner via their smartphones, mobile-powered delivery services are expanding as merchants look to meet consumers’ escalating expectations for instant gratification.

As mobile users spend increasing amounts of time with their devices, what is easier than tapping through an ad to place an order  and have Burger King delivered to wherever they are or, to order a grill on sale at Walmart and have it delivered in time for a cookout the same day. 

“I think mobile plays a natural role [in delivery services] because the same impulse that requires same-day delivery of something that you’ve purchased is best met via a phone, assuming you are out and about and using your phone to do that,” said Stephen Burke, vice president of mobile at Resource, Columbus, OH.

“The two are very well tied in terms of the emerging consumer behavior of  ‘I want it now and I can get it now,’” he said.

“It is also being fueled by Amazon and other retailers building regional delivery centers to enable same-day delivery services and being willing to pay taxes to do it, which tells you how important that is to them.” 

Merchants get onboard
Burger King is expanding its BK Delivers program, enabling customers to place an order online from their mobile device and have it delivered to their home.

The quick-service restaurant joins Google, eBay and others in leveraging mobile to support home-delivery or same-day delivery strategies.

The BK Delivers program is already in New York, Miami, Houston, Los Angeles, Chicago, San Francisco and Washington. It also recently expanded to Las Vegas and Sacramento.

In addition to visiting from a mobile device, customers can also order food from  desktop or by calling a toll-free number.

While pizza restaurants and quick-serve restaurants that have always offered home delivery are finding mobile is an increasingly important way for their customers to place orders, what is interesting about the Burger King program is the chain did not previously offer home delivery.

“Quick service retailers are already offering same-day delivery service with real time loyalty delivery discounts based on geo-location real-time weather,” said Ken Morris, principal at Boston Retail Partners, Boston.

“It is only a matter of time before this usage spreads to other segments of retail,” he said.

“Amazon and others are moving to the same day delivery model for Web/mobile orders  in Metro areas so the wave is building.” 

Marketing opportunities
Mobile is a driving factor in the need for a home delivery program as users expectations increase because of how they are engaging with brands in mobile. It is also an enabling technology, by making it easy for merchants to support logistically-challenging delivery services.

The list of companies leveraging mobile for delivery services is growing.

EBay Now is powered by an iOS app, enabling customers in San Francisco, San Jose and Manhattan to place orders from local retailers such as Target, Home Depot, Macy’s, Walgreen, Best Buy, and RadioShack and have it delivered the same day for a charge of $5.

Google introduced Shopping Express, a same-day delivery service, in March.

It is being piloted in San Francisco.  This will presumably enable shoppers to go into a store to find what they want and then place an order online via their mobile device to have it delivered.

Walmart is also offering a same-day delivery service in some cities and has offered same-day delivery since 2009.

One benefit to merchants with their own delivery services is the ability to combine delivery with GPS data and marketing to drive sales for retailers.

For example, a company can set up a mobile notification to offer free delivery to all mobile-ordering customers whose weather app is showing rain.  When the weather turns rainy during the Saturday afternoon cookout, a message is automatically delivered.   

“Restaurant companies are linking mobile ordering and marketing to drive delivery sales,” said John Eagles, vice president at Boston Retail Partners.

“As mobile online ordering becomes more and more accepted in the hospitality industry, companies are taking advantage of this technology to drive sales,” he said.

“There are numerous benefits to this type of  marketing – it is specific, time-sensitive and targeted so redemption rates are high and very effective.”

Logistical challenges
While mobile is changing consumer expectations of how quickly they can get what they want, many retailers are  not prepared from a logistics standpoint.

For retailers such as grocery stores,  it may make sense for them to deploy their own delivery systems while small specialty retailers may be better served to work with third-party providers.

“It may be that some retailers are finding that mobile is a good use-case for immediate needs, and so they do better to feature same-day ship and/or same-day delivery more prominently in the mobile channel, but frankly, almost every retailer on the supply chain side knows that however fast they can fulfill an order today, it’s not fast enough,” said Nikki Baird, Denver-based managing partner at RSR Research.

“This capability is exactly why supply chain is going to be a huge deal for retailers over the next several years, because most of them have not built a fulfillment capability to support home delivery or same-day delivery, and their existing supply chains are not fast enough to support it,” she said.

“There is going to be a lot of supply chain transformation happening – driven by digital channels – over the next few years.”

Final Take
Chantal Tode is associate editor on Mobile Commerce Daily, New York

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