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Tuesday, December 18, 2012

Lessons From Kozmo.com for Same Day Delivery

Yes, it is true if you live long enough what is old will be new again.  This, of course, is the situation as it relates to the so called same day delivery wars.  I have mentioned over and over again that I am very skeptical of this beyond being a marketing hype ploy as the density needed (low miles per stop and high number of packages per stop) is virtually unachievable except in very dense cities.  And, of course, in those cities "couriers" have been around a long time so same day delivery is not new.

Now even our friends at the Wharton School of Business have weighed in on this by analyzing what went wrong in the late '90s with Kozmo in a posting entitled " Same Day Delivery: This Time it May Actually Work" - an organization dedicated to same day delivery which went out in a flash of glory - and why this time it may be different.  The basis of this argument?  It is all about density.

The issues remain and the questions continue to go unanswered in my humble opinion.  Some of them are:

  1. How will you get the density?
  2. How will you overcome the high costs of fuel?
  3. Will this really generate incremental sales?
  4. What happens when this becomes "an expectation"?  
  5. Will this be given away for free and ultimately put pressure on margins?
  6. Do people even want it (beyond the procrastinators who are probably not your best customers)?
The answer to number 6 equates to the idea of sticking a knife in a horse to get one last gallop out of it before you run it to death (i.e., What Kris Kristofferson does in True Grit).  Every retailer is fighting over that last incremental dollar as if it will make or break them.  My analysis suggests the amount of money spent to get that very last dollar of revenue probably is not worth it however that is what they are doing as a crowd.  They want that last dollar and appear to be ready to spend a fortune to get it.  

In my next posting on Same Day Delivery, I will propose a solution to this issue and we shall see what they think. 
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3 comments:

  1. UnknownDecember 19, 2012 at 8:30 AM

    Hello! This is a good read. I will be looking forward to visit your page again and for your other posts as well. Thank you for sharing your thoughts about same day delivery in your area. I am glad to stop by your site and know more about same day delivery. Keep it up!
    The Courier industry in the United States is a $59 billion industry, with 86% of the business shared by only four companies, including DHL, FedEx and UPS. The remaining 14% shared among almost 11,900 other small businesses ranging in size from 1 employee to over 600. These businesses comprise of mostly same day deliveries and are strong offline businesses and strong online businesses like NAPAREX .
    Same day delivery is the niche that Airport Courier Service fills for many clients with immediate needs. The services offered by the big 2 (you know who they are), does not provide for same day delivery.

    same day delivery boston

    ReplyDelete
  2. AnonymousJuly 22, 2013 at 12:04 PM

    Thanks for sharing. When it comes to a courier service all your shipping needs and deadlines should always be treated with the utmost importance and all services should be offered at an affordable rate.
    - same day delivery Minneapolis

    ReplyDelete
  3. KarthikAugust 8, 2013 at 7:30 AM

    Hi Kevin,

    Do you know much about how Kozmo sourced its inventory data? Did they go directly to the stores and ask for inventory? Did they have their own items? Or was there something else that they did?

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