As product managers, we all spend our time trying to better understand what our customers really want. This can be a tricky thing to do. We need to understand what motivates our customers in order to better understand how we can provide them with the products that they will be willing to buy. Product managers at some of the largest companies out there, Amazon, Walmart, and Target, have decided that being able to deliver products that customers have ordered the next day is the best way to attract more customers. Just exactly how are they going to go about doing this?
The Challenge Of Delivery During The Holidays
Just in case you didn’t know it, the time of year between Thanksgiving and Christmas is a hyper-competitive period for just about every retailer. The product managers at the biggest of these retailers have added a new twist to this time of year by attempting to lure more and more shoppers with promises of faster delivery. Chief among these companies is Amazon who has committed to spending US$1.5B in a single quarter to expand their free customer shipping program.
In order to be able to do a better job of getting goods to the customers who have ordered them, Amazon has had to make some changes. What they have done is to add new transportation capacity. They have also been putting more selection in their fulfillment centers which are closer to their customers. What customers have been telling the Amazon product managers is that when they are shopping, they are always looking for quick delivery times even if they have remembered to shop ahead of time.
Amazon is not alone in this competition. Many of the traditional retailers have been struggling to offer deals that are as compelling as the one that Amazon is offering to their customers. However, both Walmart and Target seem to be keeping up. Both of these companies have taken several steps to remain competitive. They have been increasing their delivery capabilities. They have also been getting their shoppers to pick up online orders at their stores.
One-Day Delivery: The Next Step
All of this delivery madness started over a decade ago when Amazon was the first to offer two-day shipping to their customers. Amazon is now once again trying to change the game. Amazon is in the process of expanding their new one-day delivery service across the U.S. At the same time they are adding more items to be part of their one-day shipping offer. Amazon’s reasons for making this kind of investment is two-fold. First, they believe that by offering one-day delivery for more of their items they can boost the number of people who subscribe to their Prime membership program. They are also hoping to secure their grip on the e-commerce sales market.
Amazon is currently offering one-day delivery for 10 million products that it carries. It is hoping to be able to increase this number to 100 million products. Amazon doesn’t like to say how many markets are served by their one-day delivery program, but they do say that they are offering it “coast to coast”. In the past year, the share of Amazon packages that were eligible for one-day shipping increased from 12.4% to 35.6%. Amazon’s product managers are discovering that their one-day delivery service is causing their Prime members to do more shopping.
The availability of one-day delivery has changed customer’s expectations. Customers are increasingly expecting faster package delivery speeds. In a recent survey, 65% of the people who responded said that they were either “extremely” or “very” interested in next-day delivery services. To meet this need, both Walmart and Target are offering next-day delivery services for a much smaller group of products. Both firms offer free next-day delivery on orders that are $35 or more. Walmart is offering next day delivery on 220,000 items and Target is offering it on 150,000 items. Both firms like to say that their next-day delivery service requires no membership fee – a clear jab at Amazon.
What All Of This Means For You
In the world of retail sales, the competition has always been tough. However, in the past few years things have become even more competitive. Amazon started the completion when they first started to offer two-day delivery on most of their items. Since then, they have started offering one-day delivery on a number of items and this has made the competition even fiercer.
The holiday period between Thanksgiving and Christmas is one of the most competitive periods during the year. Offering one-day delivery is one way that many firms are hoping to distinguish themselves. Amazon is trying to improve their one-day delivery service by adding more capacity and upgrading their distribution centers. Amazon is not alone in the race to provide next-day delivery services – Walmart and Target are offering is also and they are allowing customers to drop by a store and pick their goods up. Amazon is adding more items to its list of things that it can deliver the next day. Amazon wants to boost its Prime membership program and cement its dominance of the e-commerce market. Both Walmart and Target are offering one-day delivery on a smaller set of products. They like to tell their customers that their delivery service does not require a membership.
The Amazon product managers have made the retail market more competitive with their introduction of next-day delivery. Their competition, Walmart and Target, have risen to the challenge and are offering their own version of this new service. Ultimately it is going to be up to the customers to decide just how valuable this new service is and who they are going to want to deliver it to them.
– Dr. Jim Anderson
Blue Elephant Consulting –
Your Source For Real World Product Management Skills™
Question For You: What do you think that Amazon can do to make their next-day delivery service stand out from the competition?
Click here to get automatic updates when The Accidental Product Manager Blog is updated.
P.S.: Free subscriptions to The Accidental Product Manager Newsletter are now available. It’s your product – it’s your career. Subscribe now: Click Here!
What We’ll Be Talking About Next Time
Sigh. As product managers we all would like to think of ourselves as being the person who is in charge of a cool product like Facebook or the iPhone. However, the world is filled with other products that need the help of product managers and so who’s to say what product we will eventually be put in charge of? One product that perhaps none of us would look forward to managing would be adult diapers. I mean, nobody really wants to buy this product, right? What’s the best way for a product manager to deal with a product that people need, but don’t want?