To match Amazon, retailers are investing in Christmas Eve delivery

The last-minute delivery push comes at a time when Amazon is setting a high bar for customer expectations: Amazon will offer free same-day delivery for Prime members in eligible areas, provided they order by 9:30 a.m. on Christmas Eve, and Prime Now offers free two-hour delivery windows, for Prime members in eligible areas.

“Amazon, in the retail world, is obviously leading the charge, and everybody is forced to catch up,” said David Bray, CEO of Briz Media Group, an ad agency that works with retail tech clients. “[Retailers] are rolling delivery out on a much larger scale to gain competitive advantage, but in the next year or two, it’s going to be the cost of doing business.”

To compete with Amazon, retailers are using their physical stores as delivery hubs and working with partners to rush last-minute gifts out to customers. Target is using its Shipt service to dispatch personal shoppers to stores to deliver items to customers who place orders at least two hours before a store’s closing — the chain’s first foray into Christmas Eve same-day deliveries. With Christmas Eve store closing times extended to 10 p.m. at Target stores, it’s a significant lifeline for last-minute shoppers.

“We’ve got the widest breadth of delivery and pickup in retail, and we’re well positioned to be a great resource for last-minute shoppers and procrastinators,” Target rep Eddie Baeb said.

Meanwhile, Home Depot, on the heels of a $1.2 billion supply chain upgrade, is offering same-day Christmas Eve deliveries, and it’s working with third-party delivery services Roadie and Deliv to help realize this (it’s still using its own supply chain network to fulfill larger bulk deliveries). This is the first year same-day delivery services are available on Christmas Eve for Home Depot shoppers, for fees starting at $8.99. The retailer is reportedly subsidizing some of the delivery costs; despite the investment, it’s a necessary expense to stay competitive in the Amazon age. For Home Depot, it’s a sign of how quickly the retail landscape has evolved in a short time.

“Customer expectations are changing as technology and these new services evolve; it gives us to the opportunity to differentiate,” said Home Depot spokeswoman Margaret Smith. “Retail has changed more quickly in the past few years than in our entire 40-year history.”

Griffin Carlborg, senior research associate at Gartner L2, said traditional retailers’ objective in rolling out same-day delivery services is to drive e-commerce and purchase traffic later into December, since customers often rely on Amazon for last-minute holiday orders. Amazon has built a reputation that’s tough to compete with, especially for Prime members, but traditional retailers are likely looking to entice non-Prime members.

Gartner L2 proprietary data on e-commerce holiday site traffic shows Amazon’s traffic advantage with e-commerce shoppers: In December of last year, Target’s U.S. site traffic peaked on December 10 and was 35 percent higher than the monthly average. During the same month, Walmart’s U.S. site traffic peaked on December 10 and was 22 percent higher than the monthly average; while Amazon’s U.S. site traffic peaked on December 18 and was 14 percent higher than the monthly average.

“Poaching Prime customers is incredibly challenging [but] the idea of capturing that share of people that isn’t already subscribed to Prime is interesting, and it will be interesting to see how it takes off,” Carlborg said.

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