Amazon, Target, Walmart: The One-Day Shipping Battle
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What is the main topic discussed in this episode?
Here's your money briefing for Friday, November 29th. I'm J.R. Whelan in the newsroom of The Wall Street Journal. Online shopping sites will get a workout on Black Friday and Cyber Monday. Shoppers not only want to find the perfect gift, they want a delivered ASAP. We'll discuss the one-day shipping war being waged between Amazon and its rivals. First, some money and market news you should know. Get ready to dig deeper in your pocket to pay for your morning cup of joe. Lower coffee production in Latin America caused by dry weather has sent futures prices up by 20%. The weather has particularly affected the harvesting of Arabica, a premium variety of coffee in Honduras.
How is one-day shipping becoming the new battleground between Amazon, Target and Walmart?
That's the world's third largest producer of Arabica coffee. Dry weather has also affected Arabica output in Brazil and Peru. All told, global Arabica production is expected to drop by about 3% this year to its lowest annual rate since 2015. But higher demand is also behind the price increases. Consumption in Asia and the Pacific region are projected to increase by 3% in the coming year, while bigger consumers such as Europe are expected to grow by about 2%.
Amazon pioneered two-day shipping more than a decade ago, but two-day shipping? That takes forever. Shoppers want their order tomorrow. The center of competition among the big retailers this holiday season is one-day shipping, and Wall Street Journal Corporate Bureau Chief Marcelo Prince is here to discuss. So, Marcelo, Amazon has repeatedly set the pace with offering more and more efficient shipping logistics, and it is spending a lot of money on one-day shipping this year.
They have actually said they're going to spend $1.5 billion just in the fourth quarter to do one-day shipping, which is putting pressure on the rest of the industry.
Clearly, Amazon sees a market here.
Why is Amazon investing $1.5 billion in one-day shipping this quarter?
Its Amazon Prime service has been a beneficiary.
They see this as a way to add to the number of people who are willing to pay. They already have over 100 million Prime subscribers. And by adding more products and speeding the delivery, they see this as an advantage.
You know, some other traditional retailers have really struggled to keep pace here, but Walmart and Target seem to have cracked the shipping code, though they go about things a little differently than Amazon.
Both of them have found that if they invest in their stores and use the stores themselves to help fulfill either orders that people place online or pick up at the stores, They can keep pace with Amazon, and they've both had strong sales in recent quarters leading up to this holiday season. They've both had success getting people to place orders online and actually go pick them up at the stores, which for them is less expensive than delivering it to your house.
And there's another layer here, and that is the cutoff, Dave, to offer shipping so people get it in time for Hanukkah and Christmas.
they'll shift their messaging from this week where they're focusing on getting you to place the orders and they're less dependent on whether you pick it up in the store or they deliver it to, as you get closer to the holidays, they do turn the messaging to, you still have time, place the order, come pick it up at the store.
You know, it seems like also the new arms race here is adding products and adding products to the list that is eligible for the one-day shipping.
Amazon claims they have 10 million products already.
How are Target and Walmart using stores to compete with Amazon's delivery advantage?
They want to get to 100 million, I believe. Walmart and Target are much smaller, but that's also by choice. They're sort of focusing on what they think are the most commonly ordered items that they can stock in their stores and deliver without having hundreds of warehouses like Amazon does.
And Amazon requires customers to be prime customers to get the one-day shipping. But Target and Walmart, they don't require a membership.
Walmart actually tried a membership program and gave up on it a few years ago. Neither of them currently have a membership shipping program. When it's the holidays, they'll give you free shipping on many more orders.
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Chapters
7 chapters
1
What is the main topic discussed in this episode?
0:05–0:43
2
How is one-day shipping becoming the new battleground between Amazon, Target and Walmart?
0:43–1:59
3
Why is Amazon investing $1.5 billion in one-day shipping this quarter?
1:59–3:25
4
How are Target and Walmart using stores to compete with Amazon's delivery advantage?
3:25–4:18
5
What products and membership strategies are retailers using to expand one-day shipping?
4:18–5:17
6
How are carriers and postal services coping with the holiday surge in one-day deliveries?
5:17–6:21
7
What are the bigger implications of the one-day shipping race for shoppers and retailers this holiday season?
6:21–6:30
Speakers
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