Amazon, in Threat to UPS, Tries Its Own Deliveries
online.wsj.com
online.wsj.com
As a consumer with children, it's a major hassle to go to the grocery store with my kids in tow. It's also unacceptable to wait 2 days to get what I order.
The ideal solution would be for me to go to Amazon Fresh, pick my location so I can be assured that everything listed is in stock, and then do my shopping.
On their end, the workers would pick the products from the shelves and toss it into bins with a barcode on them, just like they do at the Amazon Warehouses now. There would be 3 categories of bins: Frozen, refrigerated, and room temp.
When my order is ready, I would get an alert on my phone.
Then I would drive to an Amazon Fresh site and park in a numbered spot and either press a button on an adjacent speaker box or something or enter the parking spot number on my phone.
I would get a notice that an attendant is on their way. A few minutes later, a cart would come out with the bagged groceries and the attendant would load them into my car and I would leave.
This really seems like the best choice for Amazon. It lets them have regional centers for product warehousing so they don't have to ship cross-country, it lets consumers get products instantly without last-mile logistics problems, and it would let them gradually transition to their own in-house delivery for their regular products and not focus on the products that need instant delivery. Having their own delivery unit, UPS, and local delivery companies would encourage competition and keep the prices low for them.
If you're laid up in bed and can't leave the house, Fresh is awesome.
I've long assumed Amazon would compete more directly with both shippers & big box stores - by combining optional last mile delivery for items as well as potentially pick up points.
Fresh probably can't work very efficiently outside of a few hyper-condense markets. But ordering everything online and driving through to pickup a preselected batch - of groceries, cables, clothing, electronics (whatever)... that is very doable. You just need regional fulfillment centers (check) and then smaller local pick up points... this could be achieved with an acquisition or two.
I live in a moderately big city and there are 4 Leclerc Drives (www.leclercdrive.fr), and then there's Chronodrive (www.chronodrive.com) and U (www.coursesu.com).
I don't have a car however, so I have been looking at orders delivered to my door, and the offer is still rather poor. I'm in Lille, and even though it's a rather large city only Monoprix and Auchan offer that. Even not considering the shipping and handling charges Monoprix is already more expensive than all the other supermarkets, and Auchan online has very few products offered, to the point of being completely unsuitable as my main groceries source.
The few first orders to Monoprix bear large discounts though (which actually made the end price cheaper than what I would have paid in the nearby "real" supermarket) so I tried their service, and I am very pleased with it, to the point where I'm almost ready to use them more often even if they're more expensive.
Groceries get delivered to my door the day after, at the hour I choose, this looks like the future to me.
Many large cities in France also have a local fruits and vegetable delivery company (usually with mostly organic and/or local products).
Well, anyway, what I want to say is that I'm very pleased with the recent development of these services. I can finally skip spending hours in a supermarket every week and hauling back my things by bike or public transport.
Chip and pin arrived in France when the rest of the world were still writing cheques and doing carbon copies for credit cards, with the bank having to be called if the amount was over the card guarantee limit.
The out of town big box hypermarkets were also a part of the French landscape at a time when in the UK people would have to push some mini-trolley around a 'Fine Fare' or other such defunct supermarket in some town centre shopping arcade.
Holy crap you need a reality check.
You know what we never have to do? Spend more than 5-10 minutes shopping for two weeks' worth of groceries. I don't even leave the couch, and when the delivery person shows up, they take the bags right into the kitchen.
Totally acceptable.
The idea of them being bought from some standing order setup on some ipad screen for them to just arrive and be placed into the kitchen is just mind-blowing. I don't know if I could live like that.
In the future houses will have kitchen cupboards that can be opened from outside, probably with some steel shutter/garage door type of arrangement. You probably won't even have to have Mr delivery man step in the house, he will back fill the cupboards and even take away any out of date items for you.
Now all you need to do is buy a robot that feeds you and open a hole in your couch to put a toilet in.
But seriously, people need to get out, see the 4-5 types of tomatoes and buy the right ones. Your version works for a subsection of people, most will plan grocery shopping on their way back from work or as family time. you can buy the shampoo and Gillete razors once every few months, but for many things can't beat the 'see, touch and buy. '
While I know GSX is still "beta", I'm sure those who have Instacart would agree - same day is awesome, and it's available now in many places (and i don't have to pay $300 per year to participate).
At least that's where I see things going.
"Mooooom, we're out of milk, and I want CEREAL!!!"
"Alright, so I have everything for dinner, but it looks like we're a little low on butter, so I can't make the cake like I wanted to :/"
Now add that you have kids to the scenario, and you've got to drag them along to what should be a 3 minute shopping trip.
There are a lot of situations where taking that long for something is pretty unacceptable.
And when these services are widespread, people will be free of the necessity to expend energy "planning" their access to the essentials of life. Then we can focus on bigger and better things.
The ultimate operations experience is JIT arrival based on predictive behaviors.
You make it sounds like they're commonplace.
Children don't want to have to be drug around to a store just so they don't get in trouble / hurt at home.
So, there is a bit of difference between a consumer and a consumer that has children. The difference being that the monotonous tasks like shopping are more difficult with rogue agents.
I don't have kids, this is just my assessment of the situation.
http://downtownbellevue.com/2007/09/27/amazon-fresh-online-g...
Not sure if someone else picking them for you is the same. Maybe one day we'll reach that level, but I doubt what you suggested is better than putting your kids in a cart, give e candy or toy and shop.
Relevant - https://www.youtube.com/watch?v=uEY58fiSK8E
While you're at work, your car will leave and drive through an amazon warehouse at 1mph. Someone picks your order, loads it into the trunk of your slow moving vehicle which then returns to your office. End of the day, your goods are there.
Lots of problems to solve between where we are and there, but I do think that's where we're headed.
Giant: http://www.peapod.com/ Ralphs: http://shop.mywebgrocer.com/ Safeway offers same day delivery: http://shop.safeway.com/ecom/home
That's a few different regions, and the Ralphs has been doing it for over five years. I bet the idea has spread to most major cities by now.
I don't know why this hasn't just displaced normal grocery shopping. Lack of knowledge about it or customer comfort, hard to establish new buying trends for basic purchases, no idea.
In Seattle, there is often an option for same-day delivery. I suspect they'll eventually roll that out to most cities, assuming it's a successful experiment. I had a ~3 hour turn around the other day (ordered something at 11am and it arrived around 2pm) for a total shipping cost of $2.99 w/ Amazon Prime. It was kind of crazy and made me realize I'm living in the future.
Amazon could gain a leg on the current shipping/logistics companies even if they focused on just a few key areas:
* Real-time shipment tracking
* Cardboard-less / eco-friendly boxes
* Neighborhood locations to deliver packages to
However, one of the big problems particularly in NYC is reliability. Most people don't have a doorman and rarely will the postman leave the package for you. Even if they did, a lot of people don't like the idea of having their Amazon box sit outside their door for anyone to steal. Amazon already has their locker system and I think that could be the difference-maker. If I could ship to a convenience store, or a reliable place then I'd be able to grab my deliveries on the way home from work. Plus Amazon could reduce the number of deliveries they have to make in dense cities.
The carriers invest millions into R&D to minimize their failure rates and I think they do a pretty good job. We order from Amazon often and have only had one package lost in the last several years, and probably only 3-4 that have been late. When you consider everything that's involved in getting that little box to you within 1-2 days, the current shipping industry seems pretty impressive, and I dare say it even seems cheap. You're buying your little box passage on airplanes, conveyors, trucks, etc. for a few bucks.
In France we have such a system, "Point relais Kiala", not every internet shop allows it as an option but all the bigger ones do including amazon france. I can get my delivery to about 5 different places within a 10 minutes walk radius of me, and the advantage are numerous: no need to be there for an entire to sign because they can't tell you when it will happen, no "you weren't there I put the notification paper and you have to get your package at the post office" (leaving the package in front is not a thing like it seems to be in the US), real ability to check your package before signing, more reliable delivery time, .... And cost is the same as a regular delivery.
It just is much better overall. And for Premium subscriber, it's free just like regular delivery options.
We used to have great experiences with FedEx in the '90s; their culture seemed much different then. Recent experiences have been less good: http://blog.seliger.com/2014/02/16/fallible-fedex-and-federa... and now the company feel like any other big, uninterested, bureaucratic organization.
We once had a FedEx manager go through a parade in Washington DC to get a proposal to a federal agency. One of their managers once delayed a plane (!) based on a snafu on their end. Now we have stories like the one at the link.
Amazon has amazing customer service. It just works. Parcel delivery is hard. USPS etc don't cock it up because they're lazy or stupid. So currently Amazon does the stuff that works and lets another company tAke the blame for the hard stuff. But in future people won't be saying "some company lost my package". They'll be saying "Amazon lost my parcel".
(There are some things Amazon gets weirdly wrong - I cannot fathom how search is allowed to be so terrible)
Only the USPS has a charter/requirement to actually deliver to every address.
1) was reported "left at door" of ... my apartment building? so I never saw it and I had to reorder at my cost
2) my ouya was again marked "left at door"... of my apartment building and I never saw it (seems very likely the driver just took it home). Thankfully this time amazon reissued at their cost
3) after one failed day time delivery the package was left at a nearby ups pickup place, we called to confirm it would be there on the weekend and then they called the depot and promptly sent it back to the sender...
UPS's policy of allowing abandonment of packages is not remotely safe because drivers can just steal and mark it "left at door". It doesn't look good thought when it's an apartment building and they probably didn't even get inside.
So yes, UPS needs to die because they have cost me and amazon time and money.
UPS is actually the best carrier for Amazon stuff to us, though. We've had problems with their other shippers.
Though it does mean I think twice about ordering things on Thursday or Friday. I once had a package shipped via Prime go missing for half a week, because I ordered it on Friday and Amazon decided to pleasantly surprise me with one-day shipping instead of two. That backfired immensely. I would have been perfectly happy with a Monday delivery.
When no one was at the office to sign on Saturday morning, the package went back to some mysterious depot and they didn't re-attempt delivery until the middle of the next week. Except they marked the tracking as "delivered" that Saturday - probably so they wouldn't get in trouble with Amazon for not meeting the two-day shipping window. I was freaking out about where the package could have gone, because if it was supposedly delivered, then where was it? Where could they have even delivered it? No one was here! You can't even get in the building on Saturday without an access card. Then suddenly the tracking re-updated on Wednesday to say it was at the depot and I got it later that day.
I wish I could remember which carrier that was now.
Currently Amazon most often uses a courier for only the final ground leg from a distribution center. They already have their own delivery to deliver inter-warehouse. It would not be possible to stock the huge variety of products available on Amazon in very local warehouses. So I would not be incredibly worried if I were a package carrier now. This could perhaps take some of the business in some markets but I doubt Amazon will go private for the majority of its deliveries.
Given a truly fair, free-market, Amazon (and the other companies the article listed) would blow traditional delivery services out of the water over the next decade, no question. Companies like UPS are just too bogged down with union bureaucracy. But that's something the delivery unions will fight tooth and nail. This war will involve just as much lobbying as innovating.
I don't know to what extent that industry is regulated, but there is a very long history of teamsters getting their way.
The reason the unions exist in the first place is because a completely free and unregulated market, in the past, produced gross human rights violations. For example:
http://billmoyers.com/2014/04/23/us-workers-were-once-massac...
Unfortunately most people seem to think we need the government to protect us from an unregulated market of employers. But the reality is, we don't. Even during the Industrial Revolution, work-related fatalities were on the decline and the creation of OSHA had little affect on the trend [1].
It's most surprising to me that people in technology on HN make this argument. You see benefits at startups and larger companies like free meals, free transportation, remote work, free cell phones, gym memberships, on-site massages, free Kindles, health care, dental care, 401k matching, and so on.
What percentage of the potential pool of benefits are mandated by the government? I would say an extremely small percentage. So what causes all of these employers to offer such amazing benefits and salaries without anybody from the government telling them to do so? Competition for labor.
[1] http://mercatus.org/publication/evaluating-oshas-effectivene...
One thing I like about living in Denmark, though, is that just about all employees have reasonable working conditions and decent perks, so there's less of a social gulf between different occupations. I get 6 weeks of vacation per year, along with benefits like paternity leave, good health coverage, a safe working environment, etc.— and so does everyone else. Actually I think even in my white-collar job the benefits are a little better here, though it depends on what you care about. I don't have free lunch or a masseuse available, but the work/life balance is good: at a Valley company it would be hard to negotiate perks like 6 weeks of vacation (especially if you want a real vacation, where you disconnect for at least 2-3 weeks at a time), and people don't seem to normally take paternity leave.
Do you really believe the Clean Air Act was unnecessary? I was around in the 70's in California when the air was crap. Do you really think that cleanup would have happened without regulation? Not in a million years.
And, don't say the labor market and clean air are different. They're both driven by profits.
How can you separate the two things? The reason we need to regulate things in general (not just economically, but in terms of all laws, etc) is because there are a significant amount of bad apples who will act horribly (though admittedly rarely to the point of murder/massacre) for personal gain if unchecked.
If we lived in a truly utopian society where people always acted in the best interest of the entire community then unregulated capitalism would work fine, but so would pure socialism. We obviously don't live in such a utopian society so both extremes fail miserably.
Vacation, breaks and a mild improvement on minimum wage? Limits to what they're expected to lift? What are these horror stories?
UPS is an awful job with awful wages. Of course you could make them work harder for lower wages if you made sure they lacked representation, but I wouldn't refer to that as a fair, free market.
Nobody gets a promotion based on competence. It's pure seniority. The people that are there the longest get first dibs on better positions. And if somebody can't hold their own and doesn't contribute, you can forget about letting them go. It's almost impossible to fire someone who isn't worth the union wages they're making.
Now that's fine and dandy, I hope lots of folks get nice retirements after working at UPS their whole life. But Amazon is more efficient and will replace these high-wage manual laborers with robots and algorithms, and the union guys will try and use the power of government to stop them.
I guess you have not seen or worked really awful jobs for really awful wages before?
Source: Dad works for UPS, I worked as a preloader.
Assume half of AMZN's 2013 net shipping costs of $3,538 occurred in U.S. and profit generated thereon was ~10% of revenues (UPS 2013 operating margin was ~13%), AMZN has a guaranteed (and growing) chunk of change to go after. Not to mention the custom delivery options and probable long-term improved delivery metrics. Of course, this is a somewhat capital intensive business (relative to our estimates of the existing core businesses at least), but still could generate attractive long-term returns.
A much more interesting thought experiment is to do the same calculations on credit card exchange fee savings AMZN would generate if the company processed its payments itself. The savings would be into the billions of dollars and would be incomparably less capital intensive than any physical delivery system.
AMZN seems to want to do everything they can to expand and lower their costs; I don't know why credit card fees would be excluded from this.
They could develop a completely novel solution over time. My guess is they will become much more serious about payments over time because of articles like this[1] and this[2].
[1] http://recode.net/2014/04/12/jeff-bezos-to-amazon-payments-t... [2]http://techcrunch.com/2014/01/29/amazon-wants-to-include-pee...
So much for division of work.
They're already building their own backbone to their datacenter [1] [2]. Why won't they expand into producing their own energy (if they aren't already)?
All evidence points to them moving into areas AMZN believes they can do better or are cost centers.
[1] https://www.linkedin.com/jobs2/view/13014244 [2] http://seattle.jobing.com/network-engineer-aws-backbone-netw...
http://googleblog.blogspot.com/2012/03/helping-hooch-with-wa...
Normally a "next-day" package would be delivered by a number of different UK courier/delivery firms (Royal Mail/DPD/Yodel/etc.).
Nearly everyday, we've had deliveries to our office from unmarked white vans. I know this because our office is hard to find, and they generally phone me to say they can't locate us. Whenever I've gone outside to meet the delivery driver, I've seen the van full of Amazon packages and asked if he does deliveries for anyone else. They've have told me they "only" deliver for Amazon and won't really be pushed on the matter.
I think pretty soon those vans are going to have Amazon branding on them and a few courier companies will be wondering where their business went...
Amazon Logistics UK
They bought-out APLE in Milton Keynes, which had previously worked as a contract courier for Amazon and others.
http://www.aplemk.com/ContactUs.php
Not a company that had a stellar reputation.
It makes sense. A big DC could use the same robots that pack shipments to deliver goods direct to your door. One-hour delivery.
If they did this, then you could also get into renting items instead of purchasing them. Do you really need that big screen TV? Or could you just rent something a couple Saturdays each month? I could easily see a future where you're out by the pool and decide to have a party. Speaking a few commands into your smart phone, when you get home a couple hours later you have all sorts of things purchased/rented/installed and ready to go.
10 years out, maybe?
2. Build warehouses in state close to customers.
3. Use your own delivery trucks for shipments from those warehouses, since same-day local deliveries are the simplest part of the delivery chain.
4. Profit!
Was this a joke...you think splitting thousands of tiny parcels up for delivery in a city is simpler than sending some semis for a cruise down the interstate?
I don't think it's a pure courier company though, I think they've just paid a bunch of different couriers to deliver parcels under the Amazon brand. For example if you are out, they'll leave a card with Amazon branding over it
Amazon Logistics has no depots (that I can see - they don't tell you who the courier is), no real time tracking, no delivery windows... If this is their attempt at doing it on their own it's a terrible start.
They were already shipping some items in their grocery trucks around that time.