In 2013, instant gratification--the last differentiator of bricks and mortar stores--will take a well-funded hit from Shutl.com, a London-based firm that promises to deliver online purchases within minutes of sale, starting in New York and San Francisco.
While shopping in one's pajamas clearly has its attractions, getting your purchase instantly is still a reward only available to bricks and mortar shoppers. Despite record online spending--$21.4 billion to date, 14% increase versus the corresponding days last year, according to comScore -- you still have to wait a day, or many days for delivery of your online purchases.
People have been making online purchases for 18 years, but e-commerce hasn't evolved with the web," says Shutl founder Tom Allason, 32, told me. "We're going to fix that ."
He believes demand for instant delivery will grow quickly once people learn that it's available. Once people realize they can get instant gratification, he maintains, they'll demand it.
Shutl will deliver goods bought online from retailers who have brick and mortar stores within 10 miles of the delivery address. The service uses foot, bike, and vehicle couriers to get goods from point A to point B.
Shutl will avoid the mistakes made by much-loved early Internet instant delivery service Kozmo.com, and its competitor, Urban Fetch. Both offered their service free, with no minimum purchase and built their own delivery networks. They hired their own messengers, Allason notes, and had to pay the couriers before they had customers.
"We're using messengers at existing courier services, piggybacking on their existing capacity and re-selling it at higher prices," he says. It's a win for the services, which get more business, for the customers who get quick delivery of goods bought online, and for bricks and mortar stores who establish e-commerce relationships with their customers.
As with free shipping currently offered by many major online retailers, stores who offer Shutl delivery are likely to assign a basket value (i.e."spend $49") for free delivery, and choose not to pass on their cost. "That's not because they are altruistic, but because free delivery makes purchase twice as likely," Allason says.
Profitable in the U.K., where it serves 60 towns and more than 65% of UK households, Allason sees twice the market in the US, where the first 12 metros they plan to serve have a total population of 90 million – twice market of UK. In fact, Allason told TechCrunch the quick delivery market in the U.S.is expected to hit $26 billion by 2016.
Who'll compete with Shutl?
Shutl is not without competitors. FedEx entered the market with its SameDay City service, available in 20 municipalities from Phoenix to Los Angeles to New York. It remains to be seen how far they will expand same day delivery.
UPS is , Allason says, an enthusiastic Shutl investor. "They see it as a whole new type of logistics." In October, Shutl secured a $3.2 million in equity investment from e.ventures and Notion Capital, in addition to a $2 million investment earlier in the year from investors including UPS. Allason says the service can be scaled globally wherever there are retailers and ground courier services.
Amazon already offers same-day delivery in Boston, New York and Chicago, but Chief Financial Officer Thomas Szkutak told Bloomberg News that it doesn't plan to roll the service out on a broader basis.
Will the Post Office go out of business? Aren't they already doing that ?
Operating in the UK since 2010 Shutl claims to hold the record for the world's fastest e-commerce delivery; a shopper taking receipt of their goods within 15 minutes of checking out online.
Will that be fast enough for New Yorkers? We'll soon see.