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The Official ICSC Blog

New technology gives malls same-day delivery capability

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by Joel Groover
 
Malls around the world are making it easier for customers to get merchandise delivered. U.S. mall owners are working with a Silicon Valley startup to offer a service that would have been unthinkable a few years ago: same-day delivery of items bought from tenants’ stores and websites. Before mobile devices, such an initiative would have required investing millions of dollars into fleets of delivery trucks and drivers. But thanks to “crowdsourcing” — use of the Internet and GPS-enabled smartphones to access freelance delivery drivers ready to go on a moment’s notice — same-day delivery is now much easier for the shopping center industry.
 
“The mall operators are subsidizing and funding these runners who go around to all of the stores to pick up the items people have ordered,” said Daphne Carmeli, CEO of the Palo Alto, Calif.–based startup, called Deliv. “Then there is basically just one handoff to a driver; it becomes very efficient.” Deliv and General Growth Properties announced their plans this past summer for same-day delivery at malls in San Jose, Calif., and in Chicago, Los Angeles and San Francisco. The Palo Alto, Calif.–based startup is in similar negotiations with Macerich, Simon Property Group and Westfield, though no deals have been announced yet.
 
U.S. retailers and malls are well positioned to operate the fastest of distribution models, Carmeli says, because they boast many brick-and-mortar sites that can double as distribution centers. And given the number of those sites and their proximity to the consumers, even Amazon.com will be hard-pressed to compete. “Amazon has built 56 distribution centers across the country in the last five years to do same-day delivery in about 20 cities,” Carmeli said. “Collectively, [brick-and-mortar] retailers have far more square footage and locations than Amazon. The top 100 retailers have more than 100,000 points of distribution in the United States alone. Suddenly, scale is in the favor of the retailer.”
 
The service costs the same or less than standard shipping, but gets cheaper with volume, Carmeli says. “If a driver picks up one item at Nordstrom and it takes an hour to deliver it and get back, that delivery might cost me $15,” she said. “Delivering two items in an hour would cost $7. As you start adding more stops to drivers’ routes, the increase in volume brings down costs very quickly.”
 
General Growth is promoting same-day delivery as part of a suite of services intended to make the mall experience as convenient as possible for shoppers, says Scott Morey, a General Growth senior vice president. “But this is also about retailer convenience,” he said. “We want to make it really simple for retailers to participate so that it eliminates the barriers.”
 
The five General Growth malls working with Deliv use strategically situated staging areas for product shipment or same-day pickup, says Morey. “Let’s say I bought something online and I want to come get it at the mall, but the store is closed,” he said. “This provides a means for people to pick up what they ordered.” Served by designated parking spaces, these areas highlight the prospect of the “bagless” mall: Rather than lugging shopping bags around, customers have the purchases sent to the staging area.
 
Retailers will face competition from e-commerce giants Amazon and eBay. In October eBay announced an alliance with one of Deliv’s primary competitors, Shutl, which relies on a network of private couriers. EBay aims to begin offering same-day delivery in 25 U.S. markets this coming year. But Carmeli says consumers prefer to buy directly from retailers. “When you buy something from Google or eBay, you’re buying it from their marketplace, so the driver actually goes to the store to buy the item and bring it to you,” she said. “If you need to return that item, you are really challenged. Deliv preserves the brand of the retailer by coming into the picture only after the transaction is completed.”

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