Best Buy rolling out same-day delivery to more markets, including Twin Cities

Best Buy is stepping on the gas with same-day delivery.

After rolling out the service to 13 markets last year, the Richfield-based electronics chain is now expanding it to 14 more metro areas next week, including the Twin Cities, with plans to have it up and running in at least 40 cities by the holidays.

Best Buy also is drastically cutting its fee for the service from $14.99 to $5.99. And Best Buy has added more products to the list of thousands of eligible items, from phone chargers to tablets and headphones.

Best Buy, as well as most traditional retailers, is playing catch-up with Amazon.com, which has set the standard for fast delivery. Amazon has many ways to quickly get packages to members of its $99-a-year Prime program, including delivery within two hours through its Prime Now service.

"We have always wanted to help our customers get their purchases from Best Buy how and when they want them," Allison Peterson, president of BestBuy.com, said in a statement. "Our stores have always been an option, but we know that there are times when a customer wants their items delivered to them quickly. We're happy that by the holidays, many more customers will be able to choose same-day delivery and have it be an option on more items than ever before."

Rather than building out its own delivery fleet as Amazon has been doing, Best Buy has taken the route of many other retailers in using third-party logistics firms to handle the last mile of delivery for them.

Many of the newer same-day delivery services — including Prime Now, Postmates and Deliv, the third-party operator that Best Buy has partnered with — utilize independent contractors to manage the final miles of deliveries in an arrangement similar to that of Uber and Lyft.

Best Buy's expansion of same-day delivery comes as Deliv, based in Menlo Park, Calif., also moves into these markets. Starting next week, Deliv also will power same-day delivery in the Twin Cities from partners such as PetSmart, Macy's, Office Depot and the UPS Store.

Other operators such as Instacart and Postmates require customers to place orders through their own channels. The companies then work with the retailers on delivery.

Deliv works directly with the retailers so customers can place online orders at Bestbuy.com or through the retailer's app and select same-day delivery as an option and can also track their package's arrival.

"Same-day delivery is quickly becoming table stakes across every retail segment," Daphne Carmeli, CEO of Deliv, said in a statement.

Minneapolis-based Target Corp., which recently bought technology firm Grand Junction to improve its delivery capabilities, plans to expand a one-store pilot program of same-day delivery of in-store purchases (instead of online) to several stores in New York City this fall.

It's also expanding Target Restock, a next-day delivery service of household essentials that it has been testing in Minneapolis in recent months, to seven more markets this fall. And it has partnered with Instacart for same-day delivery of groceries in the Twin Cities, San Francisco and Chicago.

Many stores, including Walmart, Target and Best Buy, also promote their in-store pickup services for online orders as a free, and often quicker, way to get items than waiting for someone to deliver them.

Best Buy is working with another third-party provider to roll out same-day delivery to 10 more markets where Deliv doesn't operate before the holidays, when fast delivery becomes especially important to consumers.

Same-day delivery is among the increased investments Best Buy is making this year as it looks to build on its momentum coming out of its turnaround to further differentiate itself from some of its competitors. On Tuesday, executives told investors that it will boost capital expenditures this year to $700 million, up from its initial plan for $650 million. The bulk of those investments are being focused on supply chain and e-commerce.

Best Buy first began testing same-day delivery in the San Francisco Bay Area in 2015.

In addition to the Twin Cities, it will be available starting Sept. 6 in Austin, Texas, Charlotte, N.C., Cincinnati, Columbus, Ohio, Denver, Kansas City, Mo., Orlando, Phoenix, Pittsburgh, Sacramento, Calif., San Antonio, San Diego and Tampa, Fla.

Kavita Kumar • 612-673-4113