Why more companies are investing in same-day shipping
Companies are upping the ante on shipping speeds.
Both Target and Walmart boasted about increases in same-day deliveries during their earnings calls last week, while The Home Depot and Amazon rolled out new fulfillment options that get products to customers’ doors within hours of ordering.
Last week, The Home Depot launched Express Delivery to deliver orders in three hours or less, harnessing the same-day shipping from its network of more than 2,000 retail stores. Already, the company is able to deliver more than 65% of orders for in-stock parcels the same or next day, and 55% for bulky items, said evp of customer experience Jordan Broggi on the company’s second quarter earnings call.
“We’ve been working for the past couple of years on building the fastest fulfillment [in] home improvement, and that’s been a joint effort across merchandising, stores, supply chain and technology,” he said.
Meanwhile, Amazon Air announced that it’s increasing drone delivery sixfold, aiming to have the service in nearly 500 U.S. markets by the end of 2026. The service fulfills orders in as little as 30 minutes, according to a news release. The next markets to get the service include places in Georgia, Ohio, Illinois, Idaho and New York.
Target, for its part, reported during its second-quarter earnings call that its 8.7% year-on-year jump in digital comparable sales was driven by a 25% increase in same-day delivery. The company has been pushing same-day as a perk of its Target Circle 360 memberships, which saw revenue increase by over 40% compared to last year.
Aaron Alpeter, founder and CEO of Ibza Group, said the focus on faster delivery methods is largely driven by costs coming down. Customers have been hesitant to pay for increased speeds in the past. But costs for companies have gone down as more gig economy companies, like Roadie, emerge to power last-mile solutions. Companies like Instacart and DoorDash are continuing to roll out new partnerships with brands like Foot Locker and Gap for on-demand delivery.
Still, it doesn’t make sense for all companies to pay up for that kind of service even if it has become more affordable and commonplace, Alpeter said. Smaller brands may prefer to stick with standard ground shipping timelines to preserve their margins. Other companies with the resources to back a faster delivery option, meanwhile, may want to take advantage to pursue a growth opportunity.
The Home Depot, he said, is in a strong position for that strategy. That’s because DIY shoppers or contractors may order a last-minute tool or supply to finish a job instead of heading to the store, especially when they have access to free same-day delivery.
“They’re intentionally choosing to eat [the extra cost], because it’s less about cost optimization and more about incremental dollars,” he said.
That’s also the case for Walmart, which has broadened its delivery capabilities across its network this year. Sam’s Club e-commerce sales grew 26% year over year in the second quarter of fiscal 2027, which included the launch of one-hour delivery in April. Walmart also launched sub-30-minute delivery to 38 markets this year. CEO John Furner said during the company’s earnings call last week that fast delivery creates more occasions for people to choose Walmart, like ordering prepared foods.
“Speed isn’t simply a fulfillment metric; it’s an acquisition strategy,” he said. “Customers who use fast delivery shop with us more frequently, they deepen engagement with us, and they’re more likely to become Walmart+ members.”
The week in tariffs
- Back-and-forth negotiations between the United States and Canada last week purported to make changes to new tariffs on Canadian imports that were set to take effect at midnight Friday. But those talks broke down, and by Monday morning reports showed that the 50% tariffs were set to take effect. CBS News reported that U.S. Trade Representative Jamieson Greer said Canada declined to finalize the trade deal, while Canadian Prime Minister Mark Carney said retaliatory tariffs are planned take effect post Labor Day.
- For other markets, the new tariffs in a post-IEEPA landscape are in full swing. The New York Times has a useful new primer on which countries are subject to the 10-12.5% duties that President Donald Trump issued under Section 301 of the Trade Act of 1974.
What we’ve covered
Target receives almost $1 billion in tariff refunds, plans to lower prices
Companies continue to reap the benefits of tariff refunds, bolstering their 2026 balance sheets.
Target received $994 million in pre-tax tariff refunds during the second quarter, the company reported in its earnings release Wednesday morning.
When asked how the company expects that value to flow through to customers or into the business, Target CFO Jim Lee told reporters on Tuesday ahead of earnings that the company will invest in price reductions.
“We have, and we will continue to, invest in price to ensure our guests are getting tremendous value each and every time they visit us at Target,” Lee said.
Still, Target executives did not say anything during the call about directly refunding consumers, Mitchell Parton reported. In July, Amazon CFO Brian Olsavsky said the company will give customers a direct refund in some cases, CNN reported.
For more tariff refund analysis, here’s another piece looking at Walmart’s plans for its $2.9 billion refund.
Retail construction hits record lows, making it hard to find space
Expansion mode is getting harder for brick-and-mortar stores as retail construction hits record lows, Parton also reported last week. CBRE estimates show that retail construction completions fell to 5.7 million square feet in the second quarter, setting record lows for both quarterly and rolling four-quarter totals. The result is a tight market: Retail space availability held at an extremely low 4.9% in the second quarter, according to the real estate firm.
For brands, this may mean seeking smaller footprints or competing against gyms, health-care offices and other tenants for assets vacated by big boxes.
“A lot of the companies that went out of business earlier on had trouble keeping up with the changing role of e-commerce,” said James Bohnaker, principal economist of Cushman & Wakefield. “The retailers that did survive that evolution are in a stronger financial position, and they have the conviction right now to open brick-and-mortar stores.”