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Target And Office Depot Make A Bet: Can Same-Day Delivery Save Retail?

"Retail is undergoing a rapid transformation," says Office Depot Chief Digital Officer Kevin Moffitt, as Amazon rolls out "instant-pickup."

Target’s taken a direct step to tackle one of the primary holes in its omnichannel strategy by acquiring transportation tech company Grand Junction to promise same-day delivery to customers.

It’s the latest salvo store brand has taken to meet consumers’ demands in the age of Amazon and e-commerce. Those demands include personalized recommendation and satisfying customers’ purchasing preferences, such as online shopping/in-store pickup.

But as Amazon has expanded its discounts and two-day shipping with its Prime membership option, and has just heralded its Instant Pickup option, retailers have turned to one advantage they still possess — at least for the moment — in relation to Amazon: proximity to their customers and known inventory, which makes it possible to offer the ultimate convenience of letting someone click “buy” and then having it brought to them within a few hours.

Meanwhile, Amazon’s instant-pickup is beginning in Los Angeles, Atlanta, Berkeley, CA., Columbus, Ohio, and College Park, Md. Initially, the items available with Instant Pickup include snacks, drinks and electronics, as well as some of Amazon’s most popular devices.

Amazon’s latest offering represents an expansion of the same-day pickup service at the 22 locations it began opening in 2015. These same locations will serve as Instant Pickup depots for Amazon Prime customers.

While available for free to Prime and Prime Student members, the program strikes at the heart of what has thusfar remained brick-and-mortar brands’ clear advantage over e-commerce: immediacy.

That’s what animated Target’s purchase of San Francisco-based Grand Junction. The tech company’s software platform is used by retailers, distributors, and “third-party logistics providers to manage local deliveries through a network of more than 700 carriers,” Target notes in its press release.

Target and Grand Junction have currently been working on a same-day delivery pilot program for the Target store in New York’s Tribeca neighborhood. By 2018, Target plans to roll out same-day delivery to unspecified major cities, says Arthur Valdez, Target’s executive vice president, chief supply chain and logistics officer.

Target has been aggressively — and at times, fitfully — revising its omnichannel strategy. For example, earlier this year, it decided to abandon its sub rosa e-commerce program called Goldfish, which was dubbed as the “store of the future.”

Before that, in August 2015, Target started a beacon program with Estimote to round out its in-store sales assistance. It’s unclear how vital the beacon program has been — or even whether Target has continued to use it —  since the company has not discussed those efforts publicly. Along the way, Target’s experiments with interactivity has included retail pop-ups and a showcase IoT-based connected home store in San Francisco.

Whereas beacons and IoT stores may have seemed like gimmicky experiments aimed at a small cohort of tech-savvy shoppers, focusing on same-day delivery has Target casting for more more practical positions that has immediate appeal to average consumers of its 1,800 U.S. store locations.

“Target is seizing a tremendous opportunity to leverage local delivery as a retail differentiator,” said Rob Howard, Grand Junction’s founder and CEO, who will become a vice president of technology at Target. “We’re thrilled about helping to pursue this opportunity, and to join Target at this unprecedented time in retail.”

Retail Picking Up Speed

Target’s move follows similar tests by Walmart, In addition, same-day, app-based grocery delivery platform Instacart has lately been racking up partnerships with Costco, Key Food, CVS, and others.

The trend towards same-day delivery is becoming a wider retail imperative not reserved for discount shopping and food service.

Earlier this month, Office Depot announced  its same-day delivery program. The initiative kicks off on August 28 in Atlanta, Georgia and Los Angeles, California; and on September 6 in Ft. Lauderdale/Miami, Florida.

“With our new same-day delivery and our omnichannel approach, we are utilizing our retail stores as assets and part of our supply chain to give our customers the best possible experience,” said Office Depot CEO Gerry Smith.

While the obvious attractiveness of same-day delivery to customers who have grown to expect on-demand online-to-offline services, Target and Office Depot do face enormous challenges on managing routes efficiently and ensuring the correct location of customers.

To assist it, Office Depot, which has over 1,100 U.S. locations, is partnering with Deliv, which is billed as a “crowdsourced, last-mile logistics company providing same-day delivery and returns for omnichannel retailers, local businesses and e-commerce platforms.

Office Depot’s same-day delivery is predicated 8 a.m. and 11 a.m., 11 a.m. to 2 p.m., 2 p.m. to 5 p.m. or 5 p.m. to 8 p.m., depending upon the time of day they shop. For a limited time, Office Depot plans to waive the delivery fee as an introductory offer.

“Retail is undergoing a rapid transformation,” said Kevin Moffitt, SVP and chief digital officer at Office Depot. “To exceed our customers’ increasing expectations, we continue to enhance our omnichannel shopping experience. Adding same-day delivery capabilities to our growing in-store pickup and ship-from-store programs allows us to better leverage our retail locations as distribution hubs, and serve our customers faster and more efficiently.”

Deliv’s technology enables Office Depot customers to select the delivery times and locations that work best for them while being able to track their purchases in real-time.

“Office Depot is now providing businesses with the type of service customers expect,” said Daphne Carmeli, chief executive officer and founder at Deliv. “I am pleased that Deliv was chosen as its partner to power this new offering.”

By the end of 2017, same-day delivery is expected to roll out across several additional Office Depot markets.