On Wednesday, Banana Republic began offering on-demand delivery service Postmates to make same-day deliveries directly to customers’ doors, as an extension of its buy-online-pick-up-in-store initiative.
While this is the first partnership with an on-demand service for Banana Republic, the idea of working with same-day delivery platforms like Postmates and Uber is one that fashion retailers including Nordstrom and Target have explored over the last few years. Retailers are looking for new and creative ways to shorten every step of the purchasing process to compete with Amazon’s ultra-convenient offerings like same-day shipping.
And the results are already being felt: Postmates said that clothing deliveries have grown by 60% in the last year, and Vivek Patel, Postmates’ COO, said that its overall delivery-as-a-service product, for retailers across categories, has grown by 300% year over year.
The Postmates option is integrated into Banana Republic’s buy-online-pick-up-in-store interface. When customers get the email notification that their order is ready for pick-up (usually within two hours), and if they are within the delivery radius of four or five miles of any Banana Republic store in New York or Southern California, they’ll have the option to have Postmates deliver their order for free.
Amazon has pushed numerous retailers, from Asos to the recently defunct Jetblack, to push for same-day deliveries, but reducing friction comes at a price. Amazon said the company spent $1.5 billion on same-day shipping alone for the holiday season.
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Banana Republic only launched buy-online, pick-up in-store in October 2019, so the program is still in its early stages.
A representative from Postmates, which launched in 2011 as a restaurant delivery service, said that the company has seen a more than 200% year-over-year increase in retail partners in 2019 alone, with some of the largest partners in apparel, including Walmart and Shopify. While customers could technically use Postmates for deliveries with reasonable logistics since its inception, the company first started working with retailers directly in 2015.
Target does something similar with on-demand delivery service Shipt, which it acquired in 2017, delivering orders within 24 hours for a flat $10 fee in certain areas of the U.S. Nordstrom announced a partnership with Uber in 2016 to make same-day deliveries in select regions, but there hasn’t been any mention of the partnership since 2017. Nordstrom did not respond to inquiries on the partnership’s status, but according to the retailer’s website, same-day delivery is currently only available in New York City.
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Other companies have launched same-day delivery, but it’s usually restricted only to certain areas. Nike is testing same-day delivery in Japan in partnership with a company called Geek+. H&M has tested something similar, starting in Berlin in 2018 and slowly expanding to select regions in Europe and the U.S. Net-a-Porter has a same-day deliver service that it runs internally called Net-a-Porter Premier, available in New York City and select nearby parts of New Jersey and Connecticut.
Third-party companies specializing in retail deliveries like Dropoff, which works with jewelry company Ylang23, and Delivery Solutions, which works with Shopify, have popped up in the last five years to help retailers deliver faster.
In December, Uber CEO Dara Khosrowshahi said the company’s delivery service, which is primarily used for food and groceries, could theoretically be expanded to any product, mentioning retail as an area he’d like to explore more. Uber also did not respond to a request for comment on what, if any, current retail partners it has.
The representative from Postmates said that part of the company’s strategy is to capitalize on the difficulty that retailers have with setting up their own same-day delivery services. Even Amazon has struggled with its logistics given the high cost of shorter delivery times, with its own fulfillment costs rising by nearly $2 billion between 2018 and 2019 when the company started making free one-day shipping for Prime members available on more products.
“Same-day delivery with Postmates felt like a natural next step for us,” said Mary Alderete, CMO of Banana Republic. “Creating a seamless and convenient shopping experience for our customers is how we differentiate Banana Republic in this changing retail landscape.”
