Targeting online sales through last‐mile delivery platform integration

Abstract

We analyze channel integration between a last‐mile delivery platform and a general merchandise retailer in two distinct stages: (1) platform delivery access (PDA), where the retailer continues to offer standard delivery through its own website but directs customers to the platform's website for new same‐day delivery; and (2) integrated delivery access (IDA), where customers can continue to use same‐day delivery service at the delivery platform website but can purchase products in a single order with both same‐day and standard delivery options at the retailer's website. We perform a quasi‐experiment using consumer spending data from retailer, target, and delivery platform, Shipt. We find that PDA provides positive impacts to the delivery platform through increased sales. IDA, on the other hand, increases the retailer's online channel sales but does not impact the delivery platform's sales. Moreover, we find that the positive effects of PDA on the delivery platform's sales are stronger in markets where online grocery penetration is lower, indicating that the effects were likely driven by increased purchases for groceries. Finally, the positive effect of IDA on the retailer's online channel sales is stronger in markets where the retailer has a greater loyal customer base and online grocery penetration is lower.