New startup LicketyShip, the Kozmo-like ecommerce service that delivers goods within a couple of hours of ordering, is counting on this holiday season to make a name for itself. The company, which we first noticed back in January, launched in September, but they’ve recently gotten a lot of mainstream press attention and are offering $9.99 delivery up through Christmas Eve. So while the big ecommerce sites can no longer get stuff to you by the big day, Lickety Ship is still running strong. The company is only shipping same day in the Bay Area currently.
They are almost certainly taking a hit on the $9.99 deliver charge – LicketyShip outsources delivery to local couriers with extra capacity to make deliveries, which is costly. While the holiday season is a good time to pick up extra customers for ecommerce companies, Lickety Ship may be sending the wrong signal with the greatly reduced delivery charges.
Kozmo, which offered free deliveries within an hour, flamed out spectacularly in 2001 after burning through $280 million in capital. Real-time deliveries are expensive, and just because there’s lots of demand to have stuff delivered in a couple of hours doesn’t mean there’s a good business model there. LicketyShip needs to prove that people will pay $20 or more (their break even cost) to have something delivered in a couple of hours. The company says that 30% of Amazon orders are for overnight delivery, where the cost of shipment often exceeds the cost of the item itself. If that’s accurate, then there may be a bright future for the company. But Lickety Ship needs to focus their marketing attention on that segment of the market, not last minute Christmas shoppers.