Amazon yesterday shipping…simple
From Slate Since Amazon has agreed to collect sales taxes, the company can now set up warehouses right inside some of the largest metropolitan areas in the nation. Why would it want to do that? Because Amazon’s new goal is to get stuff to you immediately—as soon as a few hours after you hit Buy.
’s hard to overstate how thoroughly this move will shake up the retail industry. Same-day delivery has long been the holy grail of Internet retailers, something that dozens of startups have tried and failed to accomplish. (Remember Kozmo.com?) But Amazon is investing billions to make next-day delivery standard, and same-day delivery an option for lots of customers. If it can pull that off, the company will permanently alter how we shop. To put it more bluntly: Physical retailers will be hosed.
Can Amazon pull it off? It’s sure spending a lot of money to try, and it has already come up with a few creative ways to speed up deliveries. In each of the deals it has signed with states, the company has promised to build at least one—and sometimes many—new local warehouses. Some of these facilities are very close to huge swaths of the population. Amazon is investing $130 million in new facilities in New Jersey that will bring it into the backyard of New York City; another $135 million to build two centers in Virginia that will allow it to service much of the mid-Atlantic; $200 million in Texas; and more than $150 million in Tennessee and $150 million in Indiana to serve the middle of the country. Its plans for California are the grandest of all. This year, Amazon will open two huge distribution centers near Los Angeles and the San Francisco Bay Area, and over the next three years it might open as many as 10 more in the state. In total, Amazon will spend $500 million and hire 10,000 people at its new California warehouses.
But Amazon isn’t simply opening up a lot of new shipping centers. It’s also investing in making those centers much more efficient. Earlier this year, it purchased Kiva Systems, a company that makes cute, amazingly productive “picking robots” that improve shipping times while reducing errors. Another effort will allow the company to get stuff to you even faster. In Seattle, New York, and the United Kingdom, the firm has set up automated “lockers” in drug stores and convenience stores. If you order something from Amazon and you work near one of these lockers, the company will offer to drop off your item there. On your way home from work, you can just stop by Rite Aid, punch in a security code, and get your stuff.
All these efforts seem to be paying off. I’m a frequent Amazon shopper, and over the last few months I’ve noticed a significant improvement in its shipping times. As a subscriber to Amazon’s Prime subscription service, I’m used to getting two-day shipping on most items for free. But on about a third of my purchases, my package arrives after just one day for no extra charge. Sometimes the service is so speedy it seems almost magical. One Friday afternoon last month, I ordered three smoke alarms, and I debated paying extra for shipping so that I could install them over the weekend. The $9 per item that Amazon charges for Saturday delivery seemed too steep, though, so I went with standard two-day service. The next morning, the delivery guy arrived with my smoke detectors. I’d gotten next-day Saturday service for free. I have no idea how Amazon made any money on my order (the whole bill was less than $30) but several people on Twitter told me that they’ve experienced similarly delightful service.
If Amazon can send me stuff overnight for free without a distribution center nearby, it’s not hard to guess what it can do once it has lots of warehouses within driving distance of my house. Instead of surprising me by getting something to me the next day, I suspect that, over the next few years, next-day service will become its default shipping method on most of its items. Meanwhile it will offer same-day service as a cheap upgrade. For $5 extra, you can have that laptop waiting for you when you get home from work. Wouldn’t you take that deal?
I bet you would. Physical retailers have long argued that once Amazon plays fairly on taxes, the company wouldn’t look like such a great deal to most consumers. If prices were equal, you’d always go with the “instant gratification” of shopping in the real world. The trouble with that argument is that shopping offline isn’t really “instant”—it takes time to get in the car, go to the store, find what you want, stand in line, and drive back home. Getting something shipped to your house offers gratification that’s even more instant: Order something in the morning and get it later in the day, without doing anything else. Why would you ever shop anywhere else?
Amazon is running an FBA promotion, to entice merchants into joining the program.
Pretty good offering.
With most of the country in a record heat wave, I know Q4 seems like it is a way off, but it is only 10 weeks away! I was speaking with a category manager at Amazon today about an unrelated matter and we started to talk about a RC airlplane I had just purchased off of Amazon and she reminded me about Amazon’s toy category cutoff. For those unfamiliar with Amazon’s holiday policy; all would be toy sellers on Amazon must have a sale processed before Oct 1. And knowing how long Amazon contracts and integrations can take, the time to get on that is now. If you have thoughts on doing CBA (checkout by Amazon) or FBA (fulfillment by Amazon..get those 2 extra selling days in!) then the time crunch is even greater!
Last reminder before I head out to California for Etail West. I’ll be (well Mercent is)co-hosting w/ Amazon a cocktail party Wednesday at the Marriot. If you are going to be at the show and would like an invite, please email me and RSVP!
Free Drinks! Now that I have your interest, Mercent will be co-hosting a cocktail party with Amazon, Monday (Feb 22) at 7pm at the JW Marriot, Ristorante Tuscany patio by the fire pit. I’d love to have you come for some food and drinks. If you can’t make the party, but will be attending the show and would like to meet up, please let me know.
Last week was our annual conference at Pinehurst, NC. If you are a golfer, you know all about Pinehurst and its infamous turtleback greens…well I didn’t play #2 this year, but I did play the newly renovated #1 and maybe the best course, #4. Just don’t ask me how I shot (the answer is often and poorly).
A number of industry analysts attended (as always) so I thought I would share their takeaways about the state of E-Comm in general:
Another well attended ChannelAdvisor conference – Trends remain surprisingly positive – Last week we attended the ChannelAdvisor (CA) Catalyst Conference 2008 in Pinehurst, North Carolina. Per the company, attendance was up over 50% to roughly 500 people, with participation from companies like Amazon, eBay, Google, Overstock, Facebook, Buy.com and many large, medium and small retailer clients.
During the company’s fourth quarter earnings call CEO Jeff Bezos revealed that the online retailer was having trouble keeping up with demand for the Kindle.
In a clear case of hyperbole and spin, Bezos said, “The Kindle, in terms of demand, is outpacing our expectations…It is also, on the manufacturing side, causing us to scramble. We’re working very hard to increase the number of units that we can build and supply per week, so that we can get back—our goal is to get into a situation as quickly as we can where when you order a Kindle, we ship it immediately… We are super-excited by the very strong demand.”
—Umm BS. Do you know anyone who has one or wants one?