Who Can Beat Amazon on Same-Day Delivery? Wal-Mart

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May 16 (Bloomberg) -- MIT Center for Transportation and Logistics’ Dr. Yossi Sheffi discusses the difficulty of same day delivery from online retailers. He speaks on Bloomberg Television’s “Bloomberg West.” (Source: Bloomberg)

Problem.

Just how hard is it to have a successful same-day delivery network?

Actually, it is not easy, of coarse, because you need to control a lot of moving things away from the factory floor, warehouse floor.

The experience, the customer experience, depends on the driver, the person who delivers it.

Ups took well over 100 years to develop the system they had.

It takes a while to develop a nationwide system that can deliver on time, and most importantly, at low cost.

A system like this exists already.

There are service-level agreements, if you have a server farm and a critical part does not work, this company would have a server -- service-level agreement with these companies who could deliver the missing part into the viewer hours.

When you order a pizza, you do not wait two days.

You get it within half an hour.

But you pay for it.

Actually, you pay quite a lot for the delivery.

This is where the rubber hits the road, so to speak, the cost of the delivery, not the technical ability, but the cost of the delivery that would separate the winners from the losers.

How much does it cost?

Google will not charge anything for it because -- in fact, before i say how much it cost, it depends on several factors.

If you could go to a high-rise building and make 100 deliveries in the same building, that is not as costly as delivering in rural america where you have to drive 20 miles between deliveries.

So it depends on a lot of factors.

The important thing is why are people doing this?

Many analysts would say, who needs same-day delivery?

You need your toaster or toy within a few hours?

It is not clear that this serves an existing problem.

Maybe, maybe not.

For amazon and google, their reasons are somewhat different.

Amazon, they started amazon fresh, delivery of groceries.

Why?

They need to develop volume.

The volume of deliveries which tends to cut costs per pound delivered.

So they need something that people need every day.

Groceries r it.

On top of the groceries, later on, they can have all the packages arrive.

Amazon, they get something that they have always looked for.

You talk about these companies specifically.

I have tried all the services and i have gotten used to getting my stuff pretty fast.

If i can get it on the same day, why not?

Which of these companies do you think is best is issued to do same-day delivery very well and cost effectively, is it amazon?

No, it is walmart.

They do not do it yet, but walmart has small warehouses, stores them a fulfillment centers, more than anyone else.

When they get into the market, and i have no doubt they will.

They are actually growing faster than amazon in the online market.

My guess is walmart will be it.

If not, amazon is likely to be -- i hate to call it a winner.

It is hard for me to imagine how they will make money in this, but they will control the customer experience and the overall business may grow.

I do not think -- i do not understand why google is doing it.

They are picking stuff from cosco -- costco and walgreens and delivering it by contracting drivers, so they do not control the customer experience, but of course they will get a lot of data and maybe understand and at other services.

What do you think of amazon drones?

I think -- look, it is very hard to forecast that technology will not work, but we are quite far from a time when drones can deliver to your backyard.

It could work in rural areas, but can you imagine how many drones would have to be around new york or san francisco or boston to do something like this?

Maybe in a rural area where it is not close to airports and other air traffic, maybe something like this could work.

It sounds a little bit like the apocalypse to me.

Anything is possible.

Director of mit's center for

This text has been automatically generated. It may not be 100% accurate.

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