THINK TankDecember 19, 2019

Will Old Navy’s Same-Day Delivery Deal with Postmates Yield Last Minute Wins?

Paula Rosenblum and Brandon Rael Weigh In

By JUSTIN WHITE | Staff Writer

The Breakdown: Old Navy will team up with Postmates to help meet customer demands for fast, free shipping during this year’s holiday rush week. 

From Dec. 21 to Dec. 23, shoppers will be able to order online from Old Navy and have Postmates deliver their items the same day, for free. 

Old Navy will offer a local, same-day delivery option in more than 4,000 U.S. cities where Postmates operates.

Postmates says it will continue to work with Old Navy to offer customers same-day delivery through the end of January 2020 for a fee of $8.99. 

A spokesperson for the courier service told reporters that they are currently exploring long-term opportunities with the retailer should all go well.

Q:  Do you foresee Old Navy’s local same-day delivery option bringing in a surge of last-minute holiday shoppers and is there long-term potential for a partnership with Postmates?

 


 

The Weigh-In: Paula Rosenblum and Brandon Rael

Brandon Rael: I think retailers are really seeking any competitive advantage during this short holiday season. And essentially the “fulfillment wars,” as I call it, have become the Holy Grail for retailers that continue to use their stores as a potential way to fulfill products the same day. So, with things BOPIS becoming an industry standard, I think Old Navy is playing catch up with their partnership with Postmates.

It will certainly draw some interest in, perhaps, incremental traffic to build stores. But the bottom line is, Old Navy needs to continue to drive the proper assortments, the pricing and the value that customers are looking for. Again, execution is part of the strategy here, so everything has to play in concert with each other. And I think same-day delivery is becoming the industry standard of buy online, pickup in the store. But again, it has to be a seamless shopping experience online and you could have in the store to offer the right products, the right place, the right time, the right value. It could potentially be an opportunity in the longterm to grow for Old Navy.

Paula Rosenblum: Postmates is an interesting choice because they are, in some ways, the runt of the litter when it comes to restaurant delivery. But they’re also relatively unique in that they’ve actually worked with other kinds of retailers before.

The challenge I see is that Old Navy’s going-in position is “50% off.” So adding more cost to their products, as opposed to more cost of goods sold, is kind of a problem for them.

Here’s the advantage: I don’t know if you’ve ever seen Old Navy when they start one of those sales, but the place is a zoo. And so if a customer can avoid going to that zoo, that’s great for the customer, whether it’s same-day or next-day. But on the flip side, given how zoo-ish it does become, will the [Postmates] shopper be able to actually find what the customer was looking for and deliver it successfully?

Paula Rosenblum: So they’re going to have to probably either increase or stash some inventory for this purpose and it’s going to be challenging year one to make it right. Year two, I expect will be better than year one. But I like it in concept. I think same-day delivery is really niche. I always have. I kind of always will. But the notion of just “this is what I want, I don’t want to deal with the store, and I’m afraid or whatever reason, I don’t want to have the package sitting outside my house”– with Postmates, you get a lot better communication around when they’re coming and what time, etc., etc.

Brandon Rael: Yeah, I am in agreement with Paula. I think this partnership’s maybe a test and learning experience year one. And so they have this test and understand what the challenges are. The challenge is: would it require extending assortments in-store and essentially have the online catalog available at a majority of the larger stores so it can be available for the shoppers? But certainly, it’s scalable, it could be successful in the long term. I think they’ll be able to learn and understand things and do a postmortem after the holidays to see how successful it was, and what was the impact of their profitability, and the bottom line of increasing their cost for shipping.

Part of this conversation first appeared on the Dec. 16 episode of the Retail Rundown. Follow this link to listen to the full episode.