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Macy's Challenges Amazon For Same-Day Delivery

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NEW YORK -- Retail stores are racing to develop yet another tool to help the lazy stay on their couches -- delivering online shopping packages the day they are ordered.

Macy's, the Cincinnati-based department store, is now competing with online retailers eBay and Amazon to get products to shoppers the quickest. Its new order fulfillment system, which allows stores to ship items anywhere, will position the company to later try same-day delivery, chief financial officer Karen Hoguet said on a conference call Wednesday morning.

"If we decide it is an important need for the customer, I think we're going to be very well-positioned to do" same-day delivery, said Houget. "We're much better positioned to do so, than [Amazon] will be."

Same-day delivery is a kind of holy grail for online shopping -- the closest a customer can get to blinking and having an item appear. While buying a product online is already quicker and easier in many ways than going to a store, eliminating the wait for packages will remove one of the last barriers to instant gratification.

For many floundering brick-and-mortar retailers, same-day delivery is a threat to one of the only things keeping them afloat. But Macy's hopes its physical store base will give it an edge over online retailers, which will have to invest in new warehouses in order to fulfill local orders quickly.

Amazon is rapidly opening new distribution centers and warehouses, causing many to speculate that same-day delivery is part of the company's long-term strategy. It has offered same-day or "local express" delivery in metropolitan areas since 2009.

Meanwhile, the auction site eBay began piloting a new program called eBay Now this week in San Francisco, delivering products to customers from local Macy's, Target and BestBuy stores within hours.

For the most part, department stores have lost recent battles for shoppers' money to online competitors. But Macy's has long been preparing for the same-day delivery race, according to Liz Dunn, an analyst at Macquarie Securities. "They're trying to stay ahead of the game," Dunn said. Nordstrom is the only other department store that now fulfills online orders via its physical stores, according to Dunn.

Macy's began testing its fulfillment system in 2011 and expanded it to 280 of about 800 total stores so far this year. These stores act as warehouses, shipping items to shoppers' homes or to sold-out stores.

Sales at Macy's stores open at least a year rose 3 percent from the year earlier in the second quarter of 2012. Total sales were $6.1 billion. Still, it's too early to tell whether the new system contributed to the strong results, Houget said.

But Amazon has its own advantage. The company has long been devising ways to make spending money on its website temptingly easy, like its one-click shopping tool and the free shipping that comes with Amazon Prime. Macy's, meanwhile, charges for online orders of less than $99.

Department stores also face competition from Amazon's new fashion venture. Earlier this year, the company launched Amazon Fashion, a section of its website that sells many of the same clothing brands as Macy's.

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