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Wednesday, 22 December, 1999, 20:53 GMT
Delivery at internet speed
By BBC News Online's Kevin Anderson in Washington
For Americans in a few select cities who need a little Christmas, a group of new websites is making near-instant gratification possible.
In the latest manifestation of the 24/7 society, new US websites are trying to mimic the local corner shop with the convenience of home delivery.
"The big problem with other e-commerce sites is that they effectively shutdown by 15 December," said Ross Stevens, chairman and CEO of Urbanfetch.com.
Most sites are still selling goods, but they cannot guarantee delivery by Christmas. However, sites like Urbanfetch.com and Kozmo.com promise delivery within an hour of ordering in certain cities.
"With Urbanfetch, you can order Christmas Eve or even Christmas Day" and the gifts will still arrive in time for Christmas, Mr Stevens said.
In a recent test of Kozmo, the only hour-delivery service in Washington, an order of chocolates arrived 25 minutes after clicking the buy button.
The services are only available so far in a few cities, like New York, Washington, and Los Angeles, but they are seen as the harbinger of a new phenomenon, as middle class people who are increasingly short of time.
Click and deliver
Urbanfetch makes its deliveries using vans, mopeds, bicycles and even staff on foot to get its offerings of books, music, videos, food, gifts and electronics to customers within the hour.
Mr Stevens sees two parts to the e-commerce experience:
He believes that the second part of the experience is more important for consumers.
The science of speed
His beliefs are based on hard science and market research. He holds a PhD in finance and statistics from the University of Chicago, and the site's operations are based on "proprietary, ground-breaking research in logistics."
They decided to create the service based on focus group research in which participants said that they lead hectic, busy lives. They saw immediate delivery services as a way to alleviate some of their busyness.
Based on their market research and from orders on the site, Urbanfetch changes their offering of products, helping it promote items that sell the best.
Urbanfetch is adding 500 new users and earning $100,000 a day. In the two months since it was launched, the site has earned about $1.5m in revenue, Mr Stevens said.
Filling the need for speed
A few products often account for a large proportion of sales at e-commerce sites, according to Andrew Krainin of Shipper.com, which provides third-party distribution and delivery services for sites.
"Their top 20% of products account for 80% of their volume," he said. The company focuses on bringing these high-volume products to consumers in the same day.
Shipper.com also has technology that allows a site to show products that available for sale based on the location of the consumer.
The company currently operates its same-day service in the greater Los Angeles area, but by the end of 2000, Shipper.com wants to have warehousing sites in nine cities and provide same day service for 40% of the country.
It uses its Samedaymall.com site as a proving ground for its technology, but it is partnering with other sites to provide same-day delivery.
He said that he believes most new sites are outsourcing their distribution and delivery services.
Mr Krainan believes that these expedited delivery services are a service that helps websites differentiate themselves and improve the e-commerce experience to build loyalty.
Mistakes in delivery and distribution can make or break consumer loyalty to a website, he said.
Small window of opportunity
Expedited delivery is yet another method that e-commerce sites are using to differentiate themselves in an increasingly competitive market.
But as with other e-commerce sites and services this holiday season, they are rushing to establish market dominance to provide a barrier for other entrants.
Kozmo is blanketing the cities it operates in with coupons for $5 off the first purchase. They are also not charging for shipping. High shipping charges could slow adoption of these services, said Carrie Johnson with Forrester Research..
"They are giving up the bank for customer acquisition," Ms Johnson said. "They are going to make no money on those original customers."
But she adds that Kozmo and Urbanfetch are going to have a challenge making their economic model work. It is dependent on repeat customers adding more to their shopping carts with more products and services.
Kozmo does not charge to deliver rental videos but does charge $1 to pick them up. "We're a lazy country, and I fully believe they will make money on these add on services," Ms Johnson said.
Fellow Forrester Research analyst Evie Black Dykema said that from a consumer standpoint these services are a "no-brainer. I personally plan to be ordering up."
But to remain profitable, the give-away cannot last forever. "I expect that they will start charging more for this service, or they will fade away," Ms Black Dykema said.
"I will be very interested in how they turn this into profitability," she said. "The window for opportunity to build awareness and excitement is going to close."
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