US Chamber

Why it matters:

• Faster, more convenient deliveries have become crucial as retailers try to meet consumer expectations.
• The U.S. same-day delivery market is expected to reach $15.6 billion by 2024, and by 2025, 99% of retailers expect to offer same-day delivery.
• Against that backdrop, Walgreens is now leveraging 400 of its stores that are open 24 hours to provide deliveries to consumers at any time of the day or night.

National retail and pharmacy chain Walgreens is taking same-day delivery to the next level with all-night deliveries.

Walgreens in December extended its delivery service to cover all 24 hours of the day. The service will be available throughout the country for customers who live within delivery range of one of the 400 Walgreens stores that are open 24 hours a day.

Walgreens has been offering same-day delivery since early 2021, but previously the delivery window typically ended at 11 p.m. Now, the company is looking to be the solution for a parent whose child wakes up in the middle of the night with a fever, or someone who needs a pre-dawn delivery of milk or juice for breakfast.

“It allows us to be able to meet those customer needs really last minute, around the clock,” Stefanie Kruse, Group Vice President, Digital Commerce, at Walgreens told CO—.

Getting online orders to consumers faster and more conveniently has become table stakes for retailers.

McKinsey reported
in 2022 that one in three shoppers expect same-day delivery, and retailers are rushing to be able to provide it. A recent survey
by delivery management platform Bringg
found that 99% of retailers will offer same-day delivery by 2025, up from 35% at the beginning of 2022.

[Read: 6 Winning (and Adaptable) Customer Acquisition Strategies From Growing Brands]

Betting on a one-hour ‘best-in-class delivery promise’

Walgreens decided to expand its same-day offering after seeing how strongly customers responded to previous initiatives for faster pickup and delivery, such as its 30-minute pickup offer and one-hour delivery offers.

“We thought, ‘How do we continue to extend on our existing same-day offerings to make it even more convenient for customers and patients?’” Kruse said.

When the 9,000-store chain launched same-day delivery in April 2021, it promised deliveries within two hours. After seeing that most deliveries were arriving within one hour, it has changed its marketing to promise one-hour deliveries.

Being able to successfully execute one-hour deliveries consistently “really puts us at a best-in-class promise time and helps meet our customers needs even faster,” Kruse said.

Walgreens employees in the stores pick and pack the merchandise to be delivered, and third-party delivery services, primarily DoorDash and Uber Eats, make the deliveries.

[Read: Amid E-Commerce Boom, Last-Mile Delivery Services Seek to Meet Pandemic-Fueled Consumer Demand]

Walgreens, as one of the early leaders in the same-day delivery race, is expanding its offerings in a way that is uniquely suited to its business model, said Jonah Ellin, Chief Product Officer at 1010data, a retail data analytics firm, and author of “Store Execution, Focusing on Operations to Drive Results.”

“Walgreens has a good strategy here as they are meeting customer needs without incurring significant infrastructure costs by using [delivery] partners with flexible workforces for fulfillment,” Ellin said. “The same customer strategy that has led Walgreens to operating some locations around the clock is being extended with an added convenience,” he said.

“I wouldn’t recommend this strategy for all retailers,” Ellin said, noting that no one is likely to pay for one-hour delivery of swimwear in the middle of the night.

“However, 2 a.m., a screaming child with a fever and we just ran out of cherry-flavored fever medication? That is a need that overnight one-hour delivery solves that many will happily pay for versus getting dressed and going to the store,” he said.

Offering 24-hour service ‘drives stickier tools for customer engagement’

Walgreens immediately saw strong response to the expanded deliveries. Same day delivery orders hit a record level during the second week the 24-hour service was in place, Kruse said.

The timing of the launch, at the start of December, helped boost demand.

“[With] cough-cold season underway, it’s just a very relevant time for us to be rolling out this offering,” Kruse said. “You may also have those last-minute visitors popping in late at night and need items to make breakfast the next morning,” she said.

Walgreens has more than 400 stores that are 24-hour operations. Customers who live within the delivery radius of one of those stores can request late-night deliveries.

The return on investment for Walgreens of the expanded delivery not only is increased sales, but also increased customer engagement and loyalty.

“The broader benefit is around driving stickier tools for customer engagement – allowing our customers to get even more out of our digital assets to really strengthen their engagement across all of our channels,” Kruse said.

“We know that when customers use our tools digitally and they shop us in store, they tend to be more loyal and ultimately more engaged with us,” she said.

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Published January 11, 2023

Joan Verdon

This post was originally published on this site