Should More Retailers Offer Same-Day Delivery To Remain Relevant?

Kohl’s has joined forces with Instacart, bringing same-day delivery to nearly 109 million households across the U.S. From 1,172 Kohl’s stores nationwide, customers can now “enjoy same-day delivery in as fast as an hour,” covering a wide range of products, including accessories, skincare and beauty items, home essentials, and pet supplies.

As Kohl’s exclusive same-day delivery partner, Instacart customers can place orders for immediate or scheduled delivery, accessing the same in-store prices and still earning Kohl’s Rewards loyalty points. Blake Wallace, senior director of retail partnerships at Instacart, expressed pride in expanding the platform’s offerings beyond grocery, making everyday shopping more convenient for busy customers.

While Kohl’s has previously provided next-day delivery with carriers like UPS and USPS, this marks its first foray into same-day delivery since its partnership with the now-defunct platform Deliv in 2015. This move underscores Kohl’s commitment to enhancing its digital capabilities and meeting evolving customer expectations.

Meanwhile, Instacart, known primarily for its grocery and convenience offerings, continues to diversify its partnerships, extending its reach to include retailers such as Best Buy, Staples, and Big Lots.

Same-day delivery might start becoming a new offering that consumers expect from all retailers. But whether or not this is feasible remains up in the air. As previously discussed, retailers are grappling with who should cover the costs of same-day delivery, which can strain resources while boosting customer satisfaction and revenue.

Startup and operational expenses are significant, prompting suggestions to streamline distribution points. Consumers often prioritize reliability over speed, and many miss order cutoff times. Retailers like Target, Walmart, and Kroger are expanding same-day delivery offerings, while Amazon’s same-day network celebrated delivering its 1 billionth package last December.

In 2022, a survey from delivery and fulfillment cloud platform provider Bringg predicted that same-day delivery would be offered by nearly every retailer by 2025. At the time of the survey, only 35% of retailers were capable of providing such services. This highlighted the pressing need for enhancements in delivery network automation and hyperlocal fulfillment strategies. Outdated technology and limited real-time visibility into orders were identified as major obstacles.

Retailers also faced challenges with manual processes and coordination issues with multiple delivery partners. To address these concerns, many retailers diversified their carrier options and prioritized sustainability, incorporating electric and bike fleets. Although some retailers expressed confidence in adapting to changing consumer behaviors, the majority recognized the need for greater agility and innovation in delivery processes. The survey underscored the importance of automation, connectivity, and hyperlocal fulfillment in meeting evolving customer expectations.

Furthermore, at the end of 2023, the global managing firm McKinsey & Company explored how same-day delivery has evolved. In 2016, the anticipation for same-day delivery’s ascent was palpable, with forecasts predicting a substantial market share by 2025. However, by the close of 2023, the landscape had undergone a transformation due to COVID-19 disruptions and a deceleration in funding for new delivery models.

While speed continues to be a crucial factor in driving sales and fostering customer loyalty, the spotlight is increasingly shifting toward reliability. Customers now prioritize a spectrum of delivery options and impeccable service quality.

Despite its potential, same-day delivery remains a relatively minor player, constituting less than 5% of the courier, express, and parcel market in many nations. Notably, in countries like France and Germany, same-day offerings hover around a mere 1%, while in Japan, the United Kingdom, and the United States, it edges slightly higher at 2% to 3%. Meanwhile, in China, the share is estimated at no more than 4% overall, though intracity deliveries within major cities boast a higher range of 10% to 15%.