Online retail giant Amazon announced that it is offering same-day delivery in several cities, including much of the five boroughs, removing one of the few advantages still held by ‘brick-and-mortar’ businesses.
“Everybody is chasing after the same market,” said Yoel Schlessinger, the founder and operator of Urbful, an online retailer, founded a year and a half ago, featuring same-day delivery. “Within a year or so, everybody will have to offer same-day to be competitive.”
According to Amazon, orders placed by 12:15 p.m. — 1:15 p.m. in certain cities — will be delivered by 9 p.m. that evening for an additional $9.98, plus $0.99 per item. For members of Amazon’s “Prime” program, same day delivery will only cost an extra $5.99.
The program does not extend to all of the company’s products, but includes such diverse selections as cookies, computer routers, children’s books and food processors.
According to media reports, same-day deliveries will be carried out by Amazon’s own delivery services as well as a network of smaller carriers, a break from the company’s tight contracts with UPS, FedEx, and the U.S. Postal service.
“For something over thirty or forty dollars, it would probably cost me at least six dollars extra in a store anyway,” responded one Boro Park Amazon buyer asked if he would pay the extra fee rather than buying at a local store. “This way I save myself the hassle, get what I need quickly, and it will still cost less.”
Not all consumers agree that the offer will have such sweeping effects on traditional retail shops.
“It really depends. People’s nature is to go buy food, pampers, day-to-day items on the way home,” said a Boro Park computer technician. “But, anything more complicated — like toner or cables that they would have to go to an out-of-the way store for anyway — is worth the $5.99.”
The technician also pointed out that Amazon’s noon cut-off time is still an advantage for stores.
“I order a lot of supplies for my office. Usually things run out closer to four o’clock than one, and offices need some things right away.”
Mr. Schlesinger, whose company offers delivery of household, electronic, health, cosmetic and office supplies within six hours of order time anywhere in New York City, except Staten Island, explained how Amazon’s “fulfillment” and regular business works and why there is still room for competition.
“Fulfillment” is when an agent, like Amazon, stores products for a third party in its warehouse and advertises it on their site, acting as a middle-man between the original seller and the consumer. They also sell a good deal of their own products.
“A lot of sellers get frustrated with Amazon,” said Schlesinger. “While they are dealing with your products, they study the data and then use it to develop their own competing products or to attract your competitors to sell it to them for cheaper.”
He said that while small operations such as Urbful could not compete with Amazon on a global level, they are able to build relationships with vendors based on its commitment not to share data or seek out competitors, as well as offering higher profit margins than Amazon.
“We are presently studying Fresh Direct’s [on-line grocer] model of organizing deliveries within certain time frames and areas,” said Schlesinger. “We believe if we have the right sellers and customers we can compete.”