With Amazon's same-day delivery under way, and Google Shops reportedly next, the clock is ticking on traditional retailers who'll need new ways to lure customers.
E-commerce sales will reach $327 billion by 2016, according to Forrester Research. Consumers will be purchasing everything from $12 shampoo to $3,000 handbags -- maybe even cars -- online.
But speed of ordering and delivery is what will prompt consumer consideration.
Same-day-shipping services are changing consumer behavior -- and fast. Last year, Amazon opened a gaggle of new shipping centers near major metropolitan areas so that it could quickly get products to its Amazon Prime customers, often within the same day. TechCrunch has reported that Google is preparing to launch a competitor to Amazon called Google Shopping Express. It'll serve as a semi-universal cart that offers same-day delivery from stores in a consumer's area, including Walmart and Target.
While many of the big boxes are sure to love this development -- after all, Google is where most consumers look at products first, without even thinking about it -- the real threat is to the corner store. Ad Age spoke with Jeffrey Cole, director of the Center for the Digital Future at USC Annenberg, about how independent retailers will have to maneuver their marketing tactics. Here are three points he made.
1. Drugstores will have to work 10 times harder to keep their customers' business. From CVS to the mom-and-pop operation down the street, retailers should now offer same-day delivery, either on their own websites, or through a service like Google Shopping Express. "Let me explain how quickly things change," said Mr. Cole. "Back in 1998, one of the most popular movies of the year was 'You've Got Mail.' In the movie, Meg Ryan is the owner of a small book shop, which is taken over by a Barnes and Noble-type megastore. It didn't take even 10 years before Amazon was the predator, and Barnes and Noble the prey." Mr. Cole said he believes that unless they offer similarly convenient services, most independent drug and convenience stores won't survive. "The outlook is still cloudy. Now, the only reason to go to the local store is if you need a battery in the next hour."
2. Universal free shipping will finally become a thing. For years, apparel retailers have flirted with offering free ground shipping on purchases, but it's never become universal -- mostly because it's costly. With Amazon getting into fashion and other nonessential categories, brands are going to have to pony up to keep the business. "This is the battle for the future of retail in America," said Mr. Cole.
3. Publicizing in-store deals will be more important than ever. Companies like Shopkick aim to reward shoppers for simply walking into a brick-and-mortar retailer, but now those stores will have to try to keep their prices lower than Amazon's or Google's. That's a virtually impossible task, given the price breaks both companies get because of the size of their merchandise orders (and Amazon's willingness to lose money). So look out for more Black Friday-style door-buster deals year-round.