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Forget next-day delivery. The standard in online shopping is rapidly approaching next-hour delivery. Retail giants Walmart, Amazon, and eBay, and a few nimble startups, are testing same-day services, bringing whatever you desire—ice cream, toothpaste, a new TV—to your door, right now. To make it happen, the sellers are revving up supply chains that rely on algorithms of military-grade complexity and workers (human and robot) who roam vast distribution centers 24/7. The trillion-dollar online shopping economy is about to get bigger—and a lot faster.
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The biggest of the big-box chains won the 20th-century shopping wars by mastering “just-in-time delivery”—the science of getting just enough of everything on shelves at just the right moment. But even its massive hub-and-spoke system, which moves products from its 158 distribution centers to its 4,005 stores, can’t get stuff to your door within a few hours. To do that, the stores must become what Walmart.com CEO Joel Anderson calls “forward-deployed inventory centers.” Translation: They must do double duty, acting as retail locations but also mini-warehouses for local delivery. It’s a strategy that could serve a huge customer base—60 percent of US residents live within 5 miles of a Walmart store. Here’s how a typical same-day order is filled.
- Placing the Order | NOON
Shop at Walmart.com/togo, assuming you live in one of the pilot locations: Denver, Philadelphia, Minneapolis, northern Virginia, or San Francisco/San Jose. Selection is limited, since what you request must be in stock at your local store.
- Filling the Order | 1 PM
Workers have just a few hours to fill orders. At the store, a picker pushes a wheeled rack down the aisles, placing items in blue bins. The process is not nearly as efficient as it would be at a warehouse. “Stores have the product displayed to follow the logic of marketing,” says John Bartholdi, a professor of warehouse science at Georgia Tech. At a warehouse, on the other hand, “there’s no psychology involved. It’s pure efficiency.”
Store to Door
Pickers load orders into bins that are delivered directly to your doorstep.
Predictive Stocking
Walmart uses algorithms to track 1.2 million transactions per hour and anticipate what stores will need. As these stores become same-day delivery hubs, the company is counting on those same algorithms to predict the demands of home-delivery shoppers.
- Delivery | 4-8 PM
Walmart trucks ferry orders straight from the store to your door.
The key to the online retailer’s same-day delivery plans lies in its 40-plus massive and insanely efficient distribution centers—some exceeding 1 million square feet and primed for robot pickers that never sleep. The company is in the process of building nine more of these centers around the US. They’re already enabling same-day delivery to some homes and possibly soon to a network of lockers at convenience stores. Once fully ramped up, here’s how the process would likely work.
- Placing the Order | 10:30 AM
Less than a second after you click the buy button, algorithms fling the request to the closest warehouse that can offer economical same-day delivery.
- Filling the Order | 10:50 AM
In most warehouses, humans hunt for items on shelves. Last year, Amazon bought Kiva Systems, a company whose robots bring shelves of products to human pickers. Amazon says it’s still testing the robots. But at subsidiary Diapers.com, the bots deliver items to stationary humans, who pack the products in boxes—a much faster process.
Efficiency Rules
Amazon’s precisely stacked shelves contain products that the company measures to within 1/100 of an inch.
Man + Machine
When an order comes in, a computer directs a robot to pick up the shelf holding the product and bring it to a human picker.
- Home Delivery | 8 PM
After the box is sealed, another robot ferries it to a conveyer belt that loads it onto a truck, which takes it to a third-party courier for delivery to your door.
Locker Delivery
Amazon already has a system in place for delivering goods to lockers at 7-Elevens instead of to your home. The lockers aren’t being used for same-day delivery yet, but the idea makes logical sense: Delivering to a single store is far more efficient than making stops at individual customers’ houses and offices.
The online marketplace’s new delivery service—eBay Now—envisions the city itself as a huge warehouse, where the streets are the aisles and the stores are the shelves. It is being piloted in San Francisco, San Jose, and New York City. The system sends eBay-employed couriers called valets to chain stores like Best Buy, Macy’s, and Target—where they pick up items ordered on the eBay Now app (currently available only for iOS). The GPS on the customer’s phone tells the courier where to deliver the items.
- Placing the Order | 11:30 AM
You order using the eBay Now app on your phone. Software closely tracks inventory so only merchandise actually available on store shelves is offered. Your purchase can be delivered anywhere within the service’s purview—to your home, your office, or the Starbucks where you’ve set up shop for the afternoon.
- Filling the Order | 11:55 AM
The app pings a courier, who goes and picks up the items at participating retailers. eBay is working to make this process more efficient, possibly by looping in store clerks, who could have the goods ready at the counter.
Couriers
eBay Now’s “valets” cluster around popular stores to speed delivery times.
Order Tracking
The courier’s progress is updated in real time on an in-app map.
- Delivery | 12:50 PM
You’ll recognize your courier as he arrives, because his picture popped up on your device when he accepted the order. You pay by swiping a credit card through a PayPal card reader plugged into the courier’s iPhone or through your PayPal account. Don’t like what you ordered? The courier will retrieve the item and return it to the store.
Per-order cost for same-day delivery
The big three aren’t the only ones racing to speed up deliveries. Meet the other same-day contenders.
Postmates
Bastian Lehmann, cofounder of Postmates, doesn’t want to invest in infrastructure. “We want to understand the inventory of a city the same way Amazon understands the inventory of one of its warehouses,” he says. Postmates will deliver goods from any Seattle or San Francisco store in an hour. The startup uses the idle time of participating bike messengers and drivers coordinated via its app.
Shutl
Among the backers of UK-based startup Shutl is UPS, which must see something of its own scrappy origins a century ago in the service. Shutl is offered as a delivery option during online checkout at various retailers. The company is expanding into the US this year.
USPS
The Postal Service calls its 214,000-plus vehicles the largest civilian fleet in the world. Last year, the agency began testing Metro Post, a same-day service in San Francisco that offers treats and gift baskets from 1-800-Flowers.com. USPS spokesperson John Friess believes the agency is uniquely situated to scale up fast: “We already have the existing infrastructure in place.”
