Amazon: Same-Day Delivers More Conversions, Few Actual Users
With all the attention recently being paid to same-day deliveries by retailers including eBay, Walmart, Macy's, Nordstrom and tons of others, here's an interesting stat—and a delicious contradiction—from the largest and earliest same-day retail deliverer: Amazon. In tests with its Amazon Prime customers, the E-tailer found that the mere display of an icon touting same-day availability increased conversions by between 20 percent and 25 percent, which is stunning.
But even better, of those Amazon shoppers who saw that icon and then made the purchase, most of them ended up not using same-day delivery, opting instead for next-day. Given the way Amazon Prime is priced, same-day didn't typically cost any more than the $3.99 next-day pricing. So what is it about same-day delivery that is so enticing that it drives 25 percent conversion boosts but is so unattractive that shoppers opt to not use it? Is this like those people who post burglar alarm system signs but don't use the actual service, because the sign delivers 90 percent of the benefit?
Like many attempts to divine why shoppers do what they do, the Amazon people we spoke with weren't sure why. One theorized that it was too radical a behavioral change. Next-day delivery, which comes courtesy of their usual FedEx person who knows to leave the package and not bother ringing the doorbell, is comfortable. The idea of a shipment coming in several hours feels different.
"A lot of customers may not be prepared to accept delivery same day," said one source with first-hand information about the Amazon same-day trials.
It's a new experience for customers, one that they are still trying to figure out. "The customer understands the sense of urgency, but they don't actually need the item that urgently," that source said, adding that shoppers seem to like the idea of same-day delivery a lot more than they want the service itself.
One Amazonian suspected that it was the very early morning cutoff for same-day that put some people off. With next-day, he theorized, they'd have many more hours to decide. But that doesn't seem to add up. Such shoppers absolutely exist, but why would those customers be motivated by the same-day promo? Is it that they didn't realize until the end of the order how early the cutoff time was? But even if they missed that cutoff time, it would still be as fast as next-day so why abandon it?
Retailers now are aggressively trying to figure out whether same-day delivery makes sense and, if so, how to do it. Nordstrom does it the manual way, using its existing employees to drive their own cars to make personal deliveries. Macy's has, for years, used courier services to ship goods—at a cost—to shoppers, often tourists who want packages sent to their hotels. But it's still same-day delivery.
The delayed trial for the U.S. Postal Service's retail same-day delivery program finally got underway right before Christmas. As far as we can tell, the San Francisco-only trial featured just one retailer: 1-800-flowers.com. The problem is that 1-800-Flowers has been doing same-day delivery forever, just like all florists have done since the dawn of rose thorn pricks. On this stance, USPS was little more than an alternative delivery service. A fine experiment, but not quite what most retailers are envisioning. Certainly Walmart and Target are looking at same-day delivery potential very differently than does 1-800-Flowers. Put another way, it's not clear that any traditional brick-and-mortar retail chain ended up making the USPS leap.
As more chains think through whether they should do same-day delivery, it may not be enough to ask customers if they'd use it. If the Amazon experience is any indication, they'll say yes. The real question is whether they'll actually use it. And then comes the strange question: If customers love the idea but don't want the service, it might easily be worth the conversions to tout the service anyway. Anyone have any lawn signs for same-day delivery?