Amazon is already:
- Installing lockers into apartment communities https://www.amazon.com/b?ie=UTF8&node=6442600011 that make deliveries dramatically more efficient.
- Predictive logistics & ordering patterns are a core Amazon discipline and they are world class at it.
- Droning looks like a gimmick today, but why should it be in the future?
Imagine a not-far-out future where:
- Predictive ordering algos keep right balance of product on hand
- Order comes in, robot loads it from GIANT physical warehouse that is NOT in a city center
- Order is sorted into a "locker" or a "single" end point
- Locker end points are put onto a locker-loading vehicle that runs a daily route that ties into the 2hr timeline.
- Single points deliveries are brought by automated heavy delivery truck to city center range from which point they are either droned or courier delivered
- - -
That future ain't that far off folks.
And in the meantime Amazon, who has their shareholders trained to reinvest every dollar of profit into their scale, is going to go and corner the multi-trillion dollar grocery & last mile market.
So what do you do if you need a strip of LEDs for a project that you're putting together by this weekend and you don't have the right hours open in your schedule? (Or [insert random product here]?)
Just have it show up at the supermarket/drug store/gas station in a couple of days. Easy.
It's also cool that the apartment buildings can install the lockers and use them for packages which Amazon never touches, for the whole 'business hours' problem. But as Amazon's programs for offering free shipping to 3rd-party sellers are making it more of an 'Everything Store' by the day...well, it'll definitely be interesting to see what happens.
I don't know about "good chance". Small chance, perhaps. I've still never had a package stolen in 20+ years of ordering online. But many folks have packages delivered to work for this reason (and I admit I'm more likely to have expensive packages delivered to work). But the lockers solve a problem I don't really have, and suddenly make ordering online as inconvenient as buying stuff in-store.
I have a place in suburban Minneapolis and I could (and have) left packages sitting on my doorstep for weeks while on vacation. Still there when I got back - only a single lost package over about a decade now.
I also have a place in Chicago. A package left outside at the door would be gone within hours as I live directly off a very busy street. Even if put inside, if the door gets left unlocked or ajar a bit you have a very high chance of the package disappearing. Packages get delivered to the office or not at all when I'm in town.
I agree re: having zero interest in driving to the nearest locker though - I'd just go to the store. It's possible they will reach the density in Chicago where I can walk a half block - which I'd be okay with - but I can't imagine that being cost effective for most areas of the city.
Somewhat OT, but are these common in US (or wherever you are)? If so, out of interest, what other duties to they have?
In Finland, I've never seen such offices even in the larger apartment buildings with hundreds of dwellings.
Parcel lockers (both public and recently in apartment buildings) are a thing here as well, but they are mostly replacing pickup-from-post-office. Home delivery has always been a premium option when ordering online, not the norm. The network here is owned by Posti so any company or individual can send packages to them, or use them to send packages at cheaper rates than going to the post office.
Heavily weight the first impressions of the leasing / office staff to determine whether you WANT to live in an apartment complex: As stated above, these will be the people you will deal with for anything from clogged drains - to being unable to pay rent on time.
In short: you want to make sure they are friendly, professional and courteous -- or it may ultimately detract from the perceived quality of living in that Apartment .
 - I lived in 6 apartment complexes from time I was a broke student to young professional with a family.
But if a rental provider company owns the complex outright, they still don't have building-specific offices, but just one central office per city/region.
While such an arrangement is possible and legal everywhere something like 95% of all co-ops are in New York City.
The USPS does also have package lockers - larger boxes with keys that get left in your mailbox - but they aren't universal and companies like Fedex and UPS rarely have access to them. You can also have things held at the post office.
It's not that there are no other ways of solving the problem, it's just that the lockers are convenient and requires very little planning or forethought.
From the perception of someone who's currently learning how to code to build a restocking software for Amazon sellers.
It's loud. And dangerous.
Maybe we'll be smart enough next time to think through the costs of our revolutions.
I believe you that they're crazy loud, but I think the technology will improve and we'll figure out regulation, fly zones, etc.
Of course, this is all predicated on us agreeing as a society that we want this thing integrated into our communities. This want is unclear and I think that's the meat of the point you were making which is a fair one.
I imagine any drone network would fly at a couple hundred feet for most of the journey, and only be a "nuisance" for the period of time it has to descend straight down to the delivery point.
Across 25 associates, the average number of orders was only 3.
There's a third option for how this service survives: increase adoption so that:
- variable SG&A drops from $5 per order
- stops are closer so delivery costs drop from $5 per order
- drivers can deliver more orders per hour
1) Where did they get a $5 marginal SG&A number? This seems high to me and no source is given.
2) There is no way that, at scale, delivery costs are as high as $5/order.
The IRS standard rate for mileage in 2018 is 54.5 cents/mile. (Maybe not the most accurate metric to use, but a decent rule of thumb.) So this analysis assumes that, at scale, for the average order a driver travels 9.17 miles. This routing would be incredibly inefficient - Amazon should "batch" deliveries so that in a 10-mile "loop" a driver can drop off 3+ orders.
Furthermore, I'm not sure if Amazon drivers are employees or 1099 workers. If they're independent contractors, the delivery costs are irrelevant to Amazon, since they're passed through to the drivers.
3) Naturally, drivers utilization rates will increase as demand increases.
You cannot evaluate Prime related services in isolation because the whole point of Prime is that you get a bundle of services that make your life easier and allow you to get a bunch of things for a flat subscription rate.
Some of those services could be forever unprofitable, but if you remove them from the bundle, you could be destroying more value and making the whole program unprofitable.
The author fails to evaluate at least two key points:
1) Prime is still in its infancy. It's clear that Amazon's goal is to reach a total share of the market that can only be compared to paying for your phone bill, except in this case the phone bill is Prime, and Amazon is the only provider. That changes the whole picture regarding economies of scale and flywheel effects.
2) The author did his pseudo-experiments (asking Prime Now drivers how many deliveries they did last hour ) in Seattle (I presume since he mentions he is a PM at Amazon).
Of course Prime Now it's not going to be profitable in all markets but it's also not that far from breaking even.
The real profitability will come from highly concentrated markets like NYC and Singapore.
Living alone sick, no food in the home? Prime Now.
Parents feeling poorly and I'm 3 states away? Prime Now.
> Living alone sick, no food in the home? Prime Now.
> Parents feeling poorly and I'm 3 states away? Prime Now.
I hope that any of those three events don't happen to you (or to anyone else) very often.
I mean, I perfectly understand the utility of the service, in a given set of "emergencies", but the profitability (at scale) would come if the service is used consistently, every day, not in a handful of (hopefully) not often recurring cases.
> Need kitty litter but don't have a car and don't want to hulk 80 lbs of litter home? Prime now.
> Need a random ass torx screw driver and don't want to drive to home depot across town? Prime now.
> Forgot the ground beef but don't have time to get it because the oven is already on, cooking for the company coming over? Prime now.
> At a beer festival and sick of standing but didn't bring your camping chairs because you don't have any? Prime now.
> Standing in line outside in the rain but didn't bring an umbrella? Prime now.
> Ran out of Christmas cards? Prime now.
> Nieces birthday and no time to go shopping? Prime now.
As somebody who lives in the city without a car and nowhere near a home depot or a grocery store that is open past 10pm, prime now has been an absolute godsend. The fact that I can order a ton of items that I just _cant_ find locally no matter how hard I look, but also don't want to wait for shipping from Amazon/Ebay/whatnot is an absolute godsend.
I don't think you need to cook up an emergency to have a good reason to use Prime Now. I have tons of 'micro emergencies' every month where I'd gladly tip my driver a bit to bring my items within a few hours.
Yep, your examples are a lot less "emergencies", the previous examples were all connected to unpleasant events, but - with all due respect - yours are all connected to the same "base issue", forgetting to procure in time (or in advance) whatever you need.
A very handy solution, in those cases.
I would frequently get heads down on a project, realize I needed widget X, would order on Prime Now, continue my work, and have the widget when I needed it.
As soon as it’s introduced to Birmingham my suburban life will be complete...
On the morning of the grocery shopping day, I'd guess most families do not have 7 days of food left to eat.
In America, the average # of grocery trips per week was ~2.
That frequency doesn't seem so strange if the number of trips is affected by: (1) family size such as 4 people including 2 parents + 2 children, (2) refrigerator size of typically less than 20 cu ft (not the luxury 28+ cu ft or extra refrigerator in the garage), and (3) preference for fresh & perishable food instead of canned items.
Is it horribly wasteful and inefficient? yes. Does that get factored into the equation? no.
Emergency food is emergency food.
My emergency supplies have food, but I don't eat the emergency food unless there is an emergency.
I cant tell if this is a serious question? I definitely do not have more than 1 weeks worth of food in my home.
I feel like this article completely misses the point about the Amazon philosophy. It doesn't matter if Prime Now / Amazon Fresh are profitable. They aren't supposed to be profitable. They are building out the infrastructure of Amazon Flex for themselves AT COST and then they will open it up to other services and uses that will undercut any competitors (rideshare is the first one that comes to mind)
The focus here should be on Amazon Flex and how/where it is going, because that service will be the one that turns the actual profit. Just like AWS.
Still, as an Amazon investor, I do wonder why Amazon has to do everything themselves. It makes me nervous that they are essentially building or their own ride sharing network rather than leveraging existing networks.
There's a revolution coming to urban logistics that people like this author cannot understand. What Uber has demonstrated is that cities are much more efficient than anybody previously imagined. The day is fast approaching when on demand transport of everything will be cost effective and when that happens cities will be remade. All that retail space can become storage. Restaurants lose their tables and become industrial kitchens. Office space becomes highly fragmented with possibly just core teams of 10-20 people requiring co-location. Schools fragment; students will go to specialized teachers and facilities wherever they happen to be rather than betting everything on monolithic school systems. (Education "regresses" into large scale tutoring.) Hospitals ironically grow more centralised as technology becomes every more sophisticated. Tying all of this together will be extremely sophisticated and dynamic transport networks that can indeed move anything anywhere in the city in under an hour for very low cost.
This is already happening in China btw. This sort of urban hyper-on-demand culture has already taken hold. The author will look back on this article on ten years and regret that they failed to see the revolution.
When Prime Now started, there were no other companies that were doing what Amazon wanted to do. Let alone, keep up with the expansion that Prime Now has realized over the past few years. In addition to all that, Amazon loves to optimize every little detail. Flex is the logistics infrastructure that didn't exist to support Prime Now and other delivery programs such as Fresh, .com packages, etc.
These might take some of the business of physical restaurants - probably not a large amount, though.
I'm not sure how much they were joking.
Amazon's doing that to the entire world right now.
It does not take much research to figure out what Amazon is charging the vendors for Prime under FBA. You can look at the rates for Fulfillment by Amazon online. Remember that Amazon doesn't pay for shipping to their warehouse.
For instance, an $18,1 kg roll of 3d printer filament shipped via FBA nets Amazon about $8 by my calculations. Yes it has to be shipped and fulfilled, which involves taking it off the shelf and adding a shipping label. What are Amazon's costs for shipping/delivering 1kg small packages? Far less than $8.