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What Can Retail Giants Learn from Uber?

By Tom Rentschler / / January 5th, 2015

The battle between major retailers to make the "last mile" experience nearly instantaneous for customers continues apace and will only accelerate in the coming year.

With the holiday season now behind us, it’s time to reflect on just how successful major retailers have become in their quest to achieve true omni-channel fulfillment.

This quest to fulfill all orders from one set of inventory and assets has become something of a holy grail for retailers, as has the attempt to provide consumers with instant gratification in the form of same-day or even same-hour delivery. And that’s where the rapid rise of Uber seems so relevant.

Now available in more than 200 cities worldwide, the Uber smartphone app enables customers to request rides and then sends these trip requests to Uber drivers. Customers use the app to track their reserved vehicle’s location and pay for the ride. The connections are made in a matter of minutes, almost instantly fulfilling the customer’s desire to be driven to the requested destination, avoiding all of the well-known inadequacies of traditional taxi service. To say that Uber has been successful is an understatement. The company is now valued at more than $40 billion and has been the subject of protests and legal actions by countless taxi companies and drivers, and the governments that regulate them.

Among all major retailers, Amazon appears most intent on replicating an Uber-like experience for its customers. According to a Dec. 18 article titled “Amazon Unveils One-Hour Delivery Service” in The Wall Street Journal by reporters Greg Bensinger and Chelsey Dulaney, “ Inc. rolled out its Prime Now quick-delivery service … starting with one zip code in Manhattan.” As Bensinger and Dulaney explained, “After downloading the Amazon Prime Now mobile application, customers can search for the items they need and order them through the app. Amazon then dispatches a bike messenger with goods to the customer’s door.”

More than 25,000 items are eligible for the program, which charges $7.99 for delivery within one hour and is free for delivery within two hours. At least in Manhattan, Amazon has created a user experience every bit the equal of Uber.

But will other major retailers be able to keep pace with such rapid innovators? For Wal-Mart, Target, Macy’s and the like, the secret to their success might just be in their ability to perfect omni-channel fulfillment from their thousands of store locations. While Amazon has its network of more than 135 highly automated distribution centers, Wal-Mart has its more than 4,000 stores located within a five-mile radius of approximately 60 percent of the U.S. population.

According to an article titled “Can Wal-Mart Clerks Ship as Fast as Amazon Robots?” in the same edition of The Wall Street Journal, reporters Shelly Banjo, Suzanne Kapner and Paul Ziobro write, “After two years of falling traffic, Wal-Mart has put some of its cavernous stores to use as mini-distribution centers for online orders. The 83 Supercenters that are shipping out online orders now handle more than a fifth of the goods bought on”

In short, the battle between major retailers to make the “last mile” experience nearly instantaneous for customers continues apace and will only accelerate in the coming year. As the savvy, smartphone app-enabled consumer becomes even more demanding (and perhaps spoiled) by Uber-like brand experiences, retailers will find a way to deliver instant gratification. Could a mash-up between Uber and one of the major retailers be in the offing?

Using Uber drivers to pick up and deliver merchandise from retail stores doesn’t seem like much of a stretch to me.

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