The US market is now “ripe” for same-day delivery options as retailers attempt to follow Amazonand Walmart into offering same-day fulfilment, according to the founder and CEO of Shutl, which is
launching in the US this month.Tom Allason, whose company Shutl has been providing retailers with a same-day delivery platformfor more than two years in the UK, told CEP-Research that negotiations had been going well withpotential US retailer customers, many of which now felt under pressure to compete by offering asame-day option. And if same-day takes off in the US as he expects, the US will rapidly overtakethe UK as Shutl’s biggest market.
He expects very shortly to announce at least one “big-name” retail customer “with turnover ofmore than $1 billion online” to launch Shutl’s first operations in the US, initially in New York,San Francisco and Chicago, followed by a further nine cities across North America over the comingmonths. The operational launch in the first three cities is expected by the end of March.
“For us, scaling is incredibly easy,” said Allason. “It can take just six weeks to allow us tofind the carriers and integrate them. We will go from three to 12 cities probably overnight oncethe service is stable.”
Shutl expanded “literally overnight” from covering only London to covering a dozen cities in theUK, where it now provides same-day, and often ‘next-hour’, delivery services for a number of majorretailers in more than 50 towns and cities, linking retailer websites with the networks of couriersthrough the Shutl platform.
Offering delivery within 90 minutes, or within 60-minute delivery windows chosen by customers,Allason said Shutl was delivering within an hour of a customer’s online purchase in around 35% ofcases. He expected even faster deliveries in the US, where the metropolitan population densitiesare often higher than they are in the UK.
Allason said North America was the obvious next market for Shutl because of its maturee-commerce market and the absence in the past of any meaningful or affordable same-day options.With Amazon and subsequently Walmart and eBay last year beginning to offer some same-day deliveryoptions, retailers that had felt they would struggle to compete are pleased to be offered asolution that offers far higher service levels than Amazon currently can, Allason claims.
The Amazon same-day service was in part in response to regulatory changes in some US statesforcing online shoppers to pay the local state sales tax, encouraging Amazon to move to someregional and local warehousing, in order to offer fast delivery options in certain metropolitanareas – although nothing approaching the ‘within-90-minutes’ that Shutl can offer in partnershipwith multichannel retailers, believes Allason.
“This is a very ripe market for us now because we can enable a multichannel retailer to providea same-day service offering that a pure online retailer cannot match because it does not have thelocal stock that retailers are able to offer,” said Allason.
But the fledgling Amazon same-day delivery experience in the US has provided valuable additionalevidence of the value of same-day delivery options for retailers. “What they have seen is thatconversion rates have jumped by 25%,” said Allason. “People don’t necessarily go on to choosesame-day; the majority may still choose next-day or deferred delivery. But that experience mirrorsthe results we have seen in the UK, where conversion rates for retailers soar where they offersame-day or even same-hour delivery, or real convenience as an option.”
Shutl surveys all customers that use its service, and nearly a quarter (23%) claim that theyonly made the purchase because of the convenience of the delivery option. Customer satisfactionlevels were also extremely high, claimed Allason, helping to drive customer loyalty to the retailer“by creating a halo effect”. Perhaps even more significantly for retailers, the order value ofShutl deliveries are between 30% and 100% higher than retailers’ average online order values.
“We can then work with the retailer to find the optimal order value at which they can offerdelivery for free,” said Allason. “It is a clever way of positioning delivery because by puttinghigher value into the customers’ baskets, which translates into higher margins for the retailer,delivery essentially becomes self-funding. Delivery effectively becomes a very effective part ofthe marketing spend of the retailer.”
