Amazon launches Prime Air, its own dedicated cargo planes to speed delivery
techcrunch.com
techcrunch.com
Supposedly, Amazon does tons of backend real world optimization on shipping.
Say you, a SF resident, look at a book today on Amazon.com. Based on your past actions, Amazon knows very well how likely you are to purchase right away, or tomorrow, etc.
Now imagine the book isn't in a warehouse close enough to you for prime, but Amazon's data tells them you are much more likely to buy it when you come back to Amazon tomorrow if Prime is offered.
They'll ship the book to the warehouse in case you come back tomorrow to look at that book. Of course there's tons more modeling behind it to make sure they have very accurate estimates of the cost to pre emptively ship vs the payoff of you buying it, but that's the gist of it.
That was a few years ago, and it blew my mind at the time to think of all the optimization you can do in shipping to individuals when you're working at scale.
Amazon is more and more essentially running a CDN, but for the real world.
But there a again, I don't collect patterns about my behaviour so it could be true.
Sometimes I look at Amazon and then buy the product elsewhere, say if I spent 3 occasions over a few days looking at a product, does that breach some threshold somewhere for them to say "we have one on the hook, lets start moving this to a warehouse near him just in case"
Amazon is probably never shipping a single book, they are using analytics to decide if they should ship a case of books. If they think you are 90% likely to buy a book tomorrow but you are the only one who will it isn't worth the risk. If they decide 100 people are 50% likely to buy a book, sending a box of 100 books is a good investment - if 50 people buy tomorrow that implies 40 will buy the next day and 30 the day after and then 45 the next day and so on for a few weeks/months as sales slowly drop to zero.
But again, I know nothing, other than thinking about it a bit when the patent app became known.
I missed a lot in my own childhood and upbringing to have people in my environment that we're or we're in contact with people at the top of their field, having deeper understanding of something instead of just struggling at their level.
Facebook can gauge the difference between different types of likes from how you read a page[1], Amazon does too from their harvested clickstream.
[0] http://www.bbc.co.uk/news/technology-29609472
[1] http://www.slate.com/articles/technology/cover_story/2016/01...
For Prime orders I can see it making a huge difference. Two-day shipping gets really expensive compared to slower methods when shipping over large distances, but for short distances it can be done entirely on normal ground delivery trucks and is cheap. If prepositioning wastes a few bucks sometimes and saves a bunch of money on expensive two-day shipping other times, it could be a big win.
What I have found more amazing is the selection of books in Amazon "brick-and-mortar" bookstore compared to Barnes & Noble (B&N) bookstore in same Seattle shopping complex previously. I typically visit that shopping complex few times a month. Every time, I have visited Amazon bookstore, I tend to pickup couple of books to browse that I find interesting. When I used to visit B&N in same complex previously, it was rare for me to pickup books to browse in repeat visits. Amazon is able to achieve in 1/4th of the one floor what B&N couldn't do with books on two floors, make me pick up books on repeat visits. Amazon seems to refresh books more often in its store. Amazon might also be using the browsing/purchasing habits of users living in the area to determine what books to stock at the store.
Apologies if I seemed flippant -- things are changing so quickly nowawdays that apart from a few core texts on algorithms and programming languages, I've pretty much stopped expanding my library. It seems to be stackexchange and blog posts across the board now.
I suspect I'll pay for this choice sooner or later...
I did buy a copy of The C Programming Language a couple of years back though, but that's just because I feel like it's just one of those books you must have.
For fiction and any other type of linear reading material though, e-readers have been a godsend.
You'd be amazed how quickly you can find something in a book (or in a few cases for me, a blueprint) when you can just hit F3 or ctrl-f and search for it.
However, I often find myself in situations where I don't know precisely the term to search for and am simply browsing to see if there is some information applicable to the problem I'm attempting to solve. That's where the ability to flip rapidly back and forth shines.
1) the current Apple trend to get rid of all PDFs has made my Mac time a pain given I cannot get good print outs of documentation or use it on something other than an iPad.
I can relate with the sentiment on paper books though. It's quite great being able to quickly flip back and forth to several places, or place notes throughout. I've had luck with the highlighting feature on my Kindle, which gives a decent interface for going back and looking at all the things I've highlighted; I've developed the habit of highlighting all the important parts in a book and going back and re-reading just the highlighted bits, which has helped tremendously. Unfortunately, highlighting across pages is rather aggravating.
source: work in Supply Chain for Amazon
It's unlikely that it would be worth doing this if one person looks at a book; the return-and-buy-later rates wouldn't be high enough. But if ten people look at a book, it makes sense to move one or two copies to a closer warehouse -- and that's where Amazon's scale really wins. With O(N) customers and good historical data they can predict future purchases to within O(sqrt(N)) thanks to the central limit theorem.
Yeah... But then again, if a truck is leaving soon from warehouse A to warehouse B, why not put that book on the truck, if no one near A has looked at it recently?
With good data you can make the right small decisions.
It's no coincidence that Amazon calls a unit of storage space in its FCs a "bin" and also happens to pseudo-randomly distribute products in the FC. I am convinced that Jeff Bezos' long term plan is to automate everything, and treat every problem like a CS problem so your CDN analogy is spot on. Pricing is automated, ordering is automated, and I'm pretty sure with Kiva storage positioning is dynamically optimized too. [0]
The thing is, the further invested Amazon is along this path, the cheaper and more profitable it becomes to continue. Moreover, the harder it becomes for new players to catch up.
Will be interesting what the plan is with these planes, I note Amazon also is investigating entering the shipping industry, a space pretty ripe for disruption[1][2]
[0] http://m.youtube.com/watch?v=UtBa9yVZBJM
[1] https://news.ycombinator.com/item?id=10907163
[2] http://www.bloomberg.com/news/articles/2016-02-09/amazon-is-...
I don't suppose other companies call their product classifiers browse nodes and call their most granular classifiers leaf nodes...?
I was actually thinking the etymology of the word bin in CS is probably from someone who worked in a warehouse. It can't be a coincidence.
You're partially correct in your overall assessment of Amazon, but they aren't a tech company first. They're a logistics company that was forced to become a tech company to support their retail efforts.
http://thenextweb.com/insider/2011/10/05/amazons-cto-amazon-...
Amazon is way ahead in the logistics game, even further than some of your flagship logistics companies.
That sounds cool, but I doubt it actually happens. At least not for one person.
Unless I'm missing something, the only new thing here is the paint on the plane.
Amazon has committed to buy a 20% stake in Atlas with options to expand to 30%
http://www.marketwatch.com/story/atlas-air-grants-amazon-war...
Amazon was contracting with Air Transport Services Group (Airborne Express/DHL US, for those keeping track at home) for flights into and out of Wilmington for an air sort program. Amazon must have crunched the numbers on what they were paying to FedEx and UPS and realized that they could lease planes for what they were paying for someone else to do the deliveries...
40 Aircraft pushing packages from one corner of the globe to another? This means that they can cut their logistics costs (or, alternatively, move them in house from an external vendor, giving them more control) and be able to fine-tune delivery.
In some respects, yes. In other respects, seen any other tech companies painting their logos onto cargo planes recently?
It is an indicator of the way in which Amazon is progressively controlling more and more of their business functions around shipping.
Why would they? Amazon's entire business is reliant on shipping and their USP is basically, you can get anything shipped to you quickly. What other tech company has a requirement like this?
I guess all retailers will try to catch up to Amazon, but there's 20 years or experience and literally billions of investment to recreate.
Even if Walmart (or others) tried to invest enough to catch up, I'm not convinced there are enough engineers (with relevant experience) available! They'd have to poach from Amazon. :)
Nope, Walmart is reportedly in talks to buy Jet.com.
If you have problems with a specific shipper Amazon uses, you can contact their customer support and request they deprioritize that carrier, which has the effect of weighting it to the bottom of the shipper selection algorithm. This does not guarantee they'll never be chosen, but it does make it very unlikely.
In my own case, I had a lot of problems with Amazon's in-house fulfillment, which here in Baltimore is kind of a trash fire. (Prime Now is great. Amazon Fulfillment is not.) After an unbroken streak of erroneously failed deliveries, I spent an hour and a half on the phone with Amazon's support department, culminating in the discovery that carrier deprioritization is a thing that exists. Since it's been applied, Amazon Fulfillment has not been selected to deliver me a package, in contrast to its former high likelihood of selection. So this appears to be more than just placebo. Others have reported similar results.
As far as I can tell, in order to obtain this benefit, you need to use the specific form of words: "carrier deprioritization", or something very close to it. The specific phrase I've heard them use is "carrier deprioritization", and it'll probably help if you call it that too; I had several representatives tell me there was nothing at all they could do, until I happened upon one who mentioned this phrase. Asking for it by name may save you a lot of time.
If you've had persistent difficulty with a specific carrier, you can do worse than to get in touch with Amazon customer support and make this kind of request. Hope this helps!
You get a bunch of radio buttons to select if you want to get stuff delivered via Hermes, DHL, DHL Express, Amazon Prime Now, UPS, etc. each with different prices.
EDIT: Turns out that feature got removed several years ago. I wonder why.
No, I don't; I get a bunch of radio buttons to select the delay with which items are delivered, each with different prices. No doubt this influences the algorithm which picks carriers, but each time tier can be fulfilled by multiple carriers, even for the same item from the same seller. It's not at all the same as having a direct choice of carrier. (If I did have such an option, don't you think I'd have used it, rather than burning up time with customer support the way I described? I'm kind of a jackass, but I'm hardly a moron.)
No one with whom I've ever discussed this issue has mentioned having such a choice. If you do have it, how did you come by it? Is it perhaps a per-country thing, such that you have it because you live somewhere other than the US? Certainly there are enough other things about Amazon which differ from country to country; I wouldn't be surprised to learn this was another one. (But, from the attitude with which you respond, perhaps you might be!)
On my order page I get to choose between Prime speed (with a "guaranteed" delivery date[1]) and standard delivery. Depending on the item they also offer express, early-morning or same-day delivery but that's about it. Nowhere on the page are specific carriers mentioned and for the same option different carriers are chosen (though I usually only use the Prime one).
You can choose to have the package delivered to a drop-off location instead of your home. In that case you get to see the carrier before placing the order because they operate those shops.
The only place I have ever seen a carrier selection is the return page where you usually (but not always) can choose between a Hermes and a DHL label.
Just to satisfy my curiosity I'd like to see a screenshot of your order page.
[1]: Which often was missed until I complained. Now it works magically.
Sometimes there is a reason people don't seem to notice an obvious feature in a software you haven't used for years ;)
It was so bad that I contacted support and told them if I would rather not be able to order something than to order it and have OnTrac touch it.
I can only assume they marked my account as fussy-about-delivery because I haven't had any issues since then.
A way to put a fire under the ass of UPS and FedEx to get cheaper shipping rates so they can offer lower prices?
I have been shipping daily with both of them for a decade; it would be nice to have another choice with national coverage.
Can't feel good watching your top customer slowly replace you.
Automated trucks are probably going to be the next big thing that could potentially decrease retail shipping costs (at the expense of laying off all those truck drivers).
Sending a parcel within of 1 day from anywhere in Europe to anywhere in Europe for about 5$? That's cheaper than Amazons shipping (although amazon uses DHL), and faster.
And while DHL is already using drones for deliveries on the coastal islands and testing them on large scale for cities, Amazon is repainting an airplane with another name.
I'm not sure Amazon can ever compete on a truly global scale.
[edit: oops, wrong way round!]
It also complicates things like calculating the carbon footprint of goods. Do fresh flowers from Kenya have a high carbon footprint, given that the plane that carried them would have flown there regardless of whether or not it carried the flowers?
It's more the original google fiber, when they started running their own long-haul lines to become a backbone ISP back in the early 2000s. That's how they were able to buy youtube and rapidly ratchet up the video quality offered (remember it was originally 240p!) without loses tons of money on transit fees.
Because UPS and FedEx must deliver everywhere in the US for PR/marketing/network effect reasons, they operate many of the rural areas at a massive loss, but subsidize them with metro areas which are profitable. Amazon basically is screwing them over - they might have to either raise prices or exit the market.
It would cost Amazon 40-50b to buy Fedex, probably twice as much for UPS. If they really plan to run their own fleet they probably have a plan beyond just doing Prime deliveries.
The shipping market is incredibly complex with USPS and FedEx actually being each other's largest customers.
DHL used to have its own delivery network everywhere in the US, too, but they found it hard to compete.
Not sure what I would do if a shipping went missing while in front of my apartment door, but from past interactions with Amazon, I’d assume they send a new one without asking questions.
Not even remotely close. Amazon's total retail shipping volume represents about 5%-6% of UPS by itself. Amazon's total shipping costs annually are equal to about 9% of the revenue UPS does currently. You're dramatically underestimating how big UPS + Fedex + USPS are. Those three deal with shipping for businesses and consumers representing $40+ trillion in global economic activity, and of course have a huge share of the US $18 trillion economy. Amazon is still just a large drop in that vast shipping ocean.
I general, a lot of shipping revenue comes from business-to-business, which is not threatened by Amazon.
Check your next credit card bill. I'd be willing to bet that over 80% of all you spending in a given month is shipping.
There have been fascinating studies done on the psychology of it. It's become such a large part of our cultures that most people forget they even do it. There was a documentary that followed 17 people through their daily lives in a major US city for 6 whole months. Most people didn't even remember shipping something most days, yet on average each person when into either a Fedex, Ups, or USPS store 37 times per day to ship things. Absolutely amazing.
You had me going for a second until I got to this line. Genius.
Combined revenues of USPS, UPS and Fedex are easily found and are a little over $150bn per annum
Let me tell you a secret, Amazon's relationships with shipping companies are so good that they can get incredible deals on rates. That may seem obvious, but it's true and it's important. Because it means that there isn't a huge amount of savings to be had by buying up a shipping company. The advantage to Amazon would be acquiring the business of the shipping company, but those companies operate on thin margins and have to deal with a lot of hassles that our outside of Amazon's business scope right now, so overall it doesn't seem like a good idea.
In terms of vertical integration, it makes far more sense for Amazon to simply build whatever it needs itself if it really wants to, it's already done some of that with Amazon Fresh so they are keenly aware of the issues in that part of the business and have a good idea of when it would make sense to get into it or not (currently, for last mile delivery, the answer is "sometimes but usually not").
A rule of thumb I use before buying something is, do I need it or want it so much that it's worth more effort to obtain than a few mouse clicks?
If it took a week to ship and I can do without it for that long, can't I do without it altogether? If I need it sooner, can't I just go get it? I used to be a huge online shopper but I've rediscovered that going out into the world is not a chore and it's good to have excuses to do so.
Freeing oneself from Amazon is even better than freeing oneself from Facebook.
If I could walk to a store to get most of the stuff I'd otherwise get from Amazon, I'd consider it more often. But driving 20 minutes or more to pick up something small is not a good use of my time. It's not enjoyable. It's not a meaningful amount of exercise to walk through a store. And frankly driving for a small item is not very earth friendly. I suspect that it's better for the environment to have UPS add another package to their truck than it is for another car to drive to the store and back, even if you consider the environmental cost of the box.
What Amazon is doing and I'm commenting on is clearly aimed at promoting instant gratification and maximizing consumerism.
So it's a retail company. I feel like this statement applies to at least 99% of retail companies, likely including the ones you're shopping at instead of Amazon.
No? For this to be true in general requires a complete inability to plan for the future. If my daughter needs diapers but not urgently, that's not something I can just do without. If I need a new wireless router because mine is failing intermittently, I can probably wait a week, but I'm not waiting forever.
Sustainability in business comes from being good at products and services you claim to provide. You can game your way up for a bit with good sales and marketing, but if you suck at execution of products and services, eventually you will suffer if someone else does marginally better.
Charlatans violating this simple principle is one of the most frustrating things I've had to deal with in my career.
So it seems a bit like they are announcing a paint job on a vendor's plane. However, the underlying story reminds me a bit about Sears & Roebuck. That retailer came to dominate the scene by innovating in the logistics of getting material and goods "most of the way" there so that ordering out of the "Sear's Catalog" could be just as good as going to the store.
Amazon is not run by arrogant morons. You don't invest in Boeings with hubris. You invest after having crunched more numbers and built more models than we can realistically imagine.
Amazon Basics is awesome.
Amazon will never acquire a greater dominance in retail than what Walmart had at its peak, and Walmart was never under serious anti-trust threat. Walmart also once owned an extremely large hauling business (eventually mostly sold off to Berkshire Hathaway), and operates a large private-label Great Value brand.
Not to be snarky, but to reduce your environmental impact in this area, you'd have to stop buying things from far away places -- only buying locally produced goods. Which for parts of the world that aren't China, would be hard to do.
Sorry if I'm coming off a little harsh, but this is a pretty low-effort comment that doesn't actually add anything to the conversation.
CEO should step down.
He should have kept Bezos happy. Lowered rates. Lowered own costs.
There's no way "free shipping" isn't costing them a mountain of money, but they can just blend it into other operational costs. Logistics companies make all their money on this stuff, they can't afford to subsidize.
For FedEx to do Amazon a "favor" by matching prices is suicidal. It sucks they lost the business but there's nothing they can do.