'Stand Up and Deliver' - the competition for same day delivery hots up

12 October 2015

Argos has become the first UK bricks and mortar retailer to offer shoppers same day delivery up to 10pm.

The service, dubbed Fast Track, costs a flat fee of £3.95 and is available 7 days a week, 364 days a year for orders of Argos' 20,000 most popular items.

Fast Track represents a lucrative opportunity to capitalise on the festive rush and compete with rival Amazon – Argos' fee undercuts Amazon’s £6.99 one-hour Prime Now service which is only available to London-based, Amazon Prime members.

Investing heavily in its distribution arm at the busiest time of year appears to be a strategic move for Argos, to continue to move away from its image of the past as being a catalogue only retailer. Other big market players left Christmas shoppers disappointed last year when their chosen logistics company, Yodel, was overwhelmed by orders. Argos' model removes this risk by taking its distribution in-house. To help man the Fast Track service Argos has employed some 3,300 of its own drivers.

Convenient and reliable delivery is a key topic within the retail industry. For retailers, the ability to deliver their product quickly, reliably and conveniently to their customers is becoming almost as important as the product itself. In that context, if a retailer chooses to outsource its distribution function (many retailers are not able to take on the financial responsibilities Argos has taken on by employing 3,300 drivers) the contracts relating to that distribution will be of vital importance. If not carefully considered, the retailer risks significant reputational damage and business loss. Therefore, one key consideration to consider for a retailer is "backing-off" risk to the distributor to an appropriate level for any service delays or service refunds / credits it offers to customers. Another key consideration is having adequate provision made for business continuity and disaster recovery. Sainsbury's and M&S are all too aware of this is after a series of IT glitches caused them to suffer nationwide delivery disruption last year.

Finally, let's spare a thought for the distributor. Quite rightly, they should be looking to cap any liability for unfulfilled deliveries to a sensible proportion of their charges (if the retailer offers uncommercial service refunds / credits to its customers then the distributor shouldn't necessarily pick up all of the bill). Equally, a supplier shouldn't be underwriting all the risks involved in the service, loss of goodwill and all the usual indirect losses should be excluded in the usual way.

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