US shoppers want their stuff faster, and more retailers are responding with delivery options that would have been almost unthinkable a few years ago.
Comments this week from Target, Walmart, and Home Depot show that a new benchmark of three hours or less is emerging for customers willing to pay an express fee.
“The whole joke about doing five or six trips to the hardware store for every project, hopefully that can be a thing of the past,” supply chain consultant Ralph Asher told Business Insider.
Asher was a pioneer of the concept of fulfilling e-commerce orders from stores back in 2018, when he worked in operations research for Target. He did the math showing 75% of Americans lived within 10 miles of a Target store, which the company used in its decision to tap stores as e-commerce fulfillment hubs.
“That was something Target leveraged and leaned into pretty early on,” he said.
Target says that number is now up to 80% of households, and that most of its same-day orders are completed within two to three hours.
The company said Wednesday that it continues to invest in delivery speed and saw 25% growth in same-day service compared to the same period last year.
Lowe’s CEO Marvin Ellison also said Wednesday the home improvement chain’s rollout of free and same-day delivery options earlier this year “really drove our online business” during the past quarter. A day earlier, Home Depot said it would make the 3-hour option nationwide as an enhancement of its existing same-day service.
At Kroger, CFO David Kennerly said that deliveries completed in less than an hour accounted for half of the grocery chain’s strong e-commerce growth in the quarter.
Asher highlighted two key factors that enable more retailers to make same-day service promises: store locations and order volumes.
While these large retail chains have long operated hundreds or even thousands of US locations, it appears their online sales have recently grown large enough to support shorter delivery timelines.
“It’s entirely dependent upon how much density you can get on the road,” he said. “If you can get, say, 10 deliveries in an hour on a route, well, then now the fully loaded hourly cost of that driver is divided 10 ways instead of two or three ways, and so I think that’s what’s driving it.”
Walmart has discussed this dynamic extensively in prior earnings calls, saying that delivering to more households is allowing the company to achieve lower costs and higher speeds.
The retail giant said Thursday that 37% of store-fulfilled delivery orders last quarter were completed in less than three hours. It has also reported several instances of orders being delivered within minutes.
And then there are the drones. While reliable overnight shipping was pioneered by FedEx in the 1970s, it was Amazon that largely made e-commerce deliveries routine for Americans.
Now the giant online retailer — which has continued to escalate the shipping wars since introducing two-day Prime shipping 20 years ago — said Wednesday that it is expanding drone service to nearly 500 US cities and towns by the end of this year.
“Orders arrive in as fast as 30 minutes, with most orders arriving around 60 minutes after checkout,” the company said.
Still, some customers aren’t feeling so rushed.
Amazon customer Lindsey Austen, whose video of a drone delivery splashing down into her swimming pool went viral, told Business Insider she wasn’t expecting her order of cat food and shoe insoles to arrive in 20 minutes.
“If I needed something in 20 minutes, I’d get in my car and do it,” she said. “Same day delivery is one thing, or like overnight delivery, or 24-hour delivery, that’s fine.”
Truman Dickerson contributed reporting.
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