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Retailers Experimenting with Same-Day Delivery of On-Line Purchases

Posted at: 10/10/2012 6:43 PM
Updated at: 10/10/2012 7:02 PM
By: Mark Saxenmeyer

If you avoid shopping on-line because you don't like having to wait for your purchases to arrive, retailers like Walmart and Target have been listening.

Walmart began experimenting with same-day delivery in three U.S. locations this week--the Twin Cities being one of them. Not to be outdone, Target announced a plan of its own Wednesday.

5 Eyewitness News decided to put this same-day promise to the test.

Walmart's new program, which it calls "Walmart To Go" is being marketed for the holidays. Consumers can buy everything from toys and sporting goods to home décor and electronics on the retail giant's website--with one catch. They have to complete their order by noon on the day they wish to have same-day delivery. Then, they schedule a four-hour window sometime between 4 p.m. and 10 p.m. for the delivery to arrive.

5 Eyewitness News made three separate purchases Wednesday morning, the second day the program had been offered in the Twin Cities. We ordered a camera, then some DVDs, and finally, a DVD player. We asked for them to be delivered to KSTP on University Avenue in St. Paul. Walmart says the on-line prices are the same as they are in the store. The same-day delivery service costs $10 for an unlimited number of items, with no minimum purchase.

According to Dave Vang, a University of St. Thomas finance professor, "It might work out to be an additional market segment they never had before. Walmart typically has catered to lower income families. This would be a new group that are probably people who are busy and don't have time to shop."

This new retail strategy essentially strikes at the heart of Amazon.com's business model. Yet because Amazon ships from just 40 distribution centers in the U.S.,it offers same-day delivery only in limited cases. Walmart is shipping from its 4,000 retail stores.

Still, some wonder if more is better. "It's very difficult to think of their stores as distribution centers that are going to be an efficient, lean, mean profit-making machines," said Loman Lundsten, a St. Thomas marketing professor.

Not to be outdone, on Wednesday Target announced a partnership with eBay to provide same-day delivery through a service it's been testing. Best Buy and ToysRUs are also signing up for the experiment. The program is only available in San Francisco right now but more cities are expected to follow. Holiday sales will determine if these marketing changes become permanent.

"I think they're running the test to see what the mix of merchandise is," Lundsten said. "And see if they can make any money on that or, alternatively, what they would have to do to their prices to begin to make some money on it."

Late this afternoon (approximately 4:20 p.m.), Walmart made good on its delivery promise. A private local courier service delivered all three of of our separate purchases simultaneously--on time, in order, without a problem.

Walmart says a recent customer survey revealed the majority of respondents said they would consider same-day delivery if the option were available to them.

Given this is still a test, Walmart says it won't release details about the number of orders it's processed so far in the Twin Cities, or if it's had any delivery problems.

Mark Saxenmeyer can be reached at msaxenmeyer@kstp.com