Instant gratification and retail

We live in the era of “now” – almost instant access to almost anything. Need to settle an argument with a friend at dinner? No problem, I can lookup the information and have an answer before the entree is served. Need a new pair of running shoes? Easy, I can order the exact color combination and size after just a few clicks.

As a relevant Wired article notes, anyone under the age of 25 has grown up with “instant knowledge” and “instant buying,” and that Millennial as as a generation are becoming increasingly impatient. In fact, the article notes that psychologists have called this phenomenon “delayed discounting,” where we discount our overall gratification by getting something now. As explained in the article: “The more we get rewarded by delay discounting the more we like it. It becomes a treadmill where we need more and more instant gratification.”

Instant gratification has powerful effects, influencing decisions and causing changes in the way we normally operate. This effect is seen in the business world, where both online and offline retailers understand this power and have implemented practices to satisfy consumers as quickly as possible.

Key e-Commerce players are moves in this space. Amazon recently announced that it would be expanding their same day delivery service to six new cities. The company wants to reduce the delivery lag and target goods normally available at local super centers. Google is testing its Google Shopping Express service, hiring drivers to make local deliveries of household goods. eBay also launched eBay Now, a service to facilitate same day deliveries from local stores in over 25 cities. We also see numerous startups, some very well funded, that are tackling this space:

· Instacart — $54.8M raised

· Postmates – $23M raised

· Deliv — $12.4M raised

· Zipments — $2.25M raised

Last week, the Hong Kong-based van-on-demand service GoGoVan raised a $6.5M series A to expand to Asia, and Uber, the black car app, announced a pilot test to make same day grocery deliveries.

While this space has grown predominantly due to growing demand in e-commerce, physical brick and mortar retailers have also been taking similar approaches to enhance their omni-channel strategy. Target, Walmart, and Kohl’s are testing, or have recently implemented, a Buy Online Pick-up In Store (BOPIS) strategy in order to reduce delivery lag and take advantage of existing overhead.

Lets also not forget that sustainability could be a long-term concern. While merchants and other large companies can afford to subsidize costs right now, it is reasonable to expect that they will eventually be passed on to the customer. Delivery services like Postmates already tack on additional fees, so it will be interesting to see how this space continues to grow. Nonetheless, there seems to be a strong demand due to our evolving expectations of faster service and I am curious to see how merchants will continue to play into this desire.

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