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Friday, December 28, 2012

Daily Report: Online Retailers Push Same-Day Shipping

This holiday season, same-day shipping replaced free shipping as the new must-have promotion for e-commerce companies, Stephanie Clifford and Claire Cain Miller report in Friday's New York Times. Same-day shipping is logistically complicated and money-losing - and may not even be a service that consumers want or need, analysts say. But retailers big and small are willing to take the risk. Even the Postal Service has introduced a same-day option for retailers. And the reason is simple: fear of Amazon.com.

Amazon, the world's biggest online retailer, has hinted that it will expand its same-day shipping service, giving customers the immediate gratification that has been the biggest advantage of brick-and-mortar stores.

Big retailers like Toys “R” Us, Macy's and Target have worked with eBay to deliver items the same day, as have ot her old-line stores. Google has begun testing a local delivery service with several chains.

“There's lots going on in this space, and it's all driven by Amazon,” said Tom Allason, founder and chief executive of Shutl, a British same-day delivery service that will expand to the United States next year. “It's not really being driven by consumers at the moment.”

The same-day delivery idea was a spectacular failure during the dot-com boom. Companies like Kozmo.com and Webvan went under because the services simply cost too much to be profitable. Amazon has offered same-day shipping since 2009, but with limits - only in big cities near Amazon warehouses on certain items ordered in the morning.

The geographical limits exist because Amazon had built warehouses far from major cities to avoid charging sales tax in certain states. But it has now given in on the sales tax fight, and in return, is erecting warehouses near cities like San Francisco, which analyst s say is paving the way for faster, more widespread same-day delivery and spurring competitors.