Amazon Takes a Big Step Toward Making Its Own Deliveries

In SF, Amazon already does some of the last mile deliveries, and I haven't been impressed so far. A blender chucked over a ~8 foot gate so it busted the box inside despite a ton of packaging. A package that was left _outside_ the gate - when I live right on Market Street (if you don't know local geography, it's one of the biggest streets in SF)... that was stolen before I even realized it was delivered. Bonus points because it was a birthday gift but Amazon wouldn't rush the replacement package showing up a day late. One package carefully put in front of the basement door, almost missed. Another wedged through the gaps in the gate and damaged. One time a person rang the doorbell and just dropped the box in front of the gate when they heard the buzz. Did I mention I've been home for all these packages and have no idea why people can't just ring the doorbell and wait 10 more seconds? Lastly, I have an order going to a commercial address and I'm worried they might try Sunday evening delivery instead of a saner time like 9am on Monday for all other carriers.

USPS works because the same people tend to work the same routes and end up knowing a lot about when and where to leave things - I also know the UPS guy for my address and when he's doing deliveries, it works flawlessly too. I'm worried that Amazon isn't planning for something like that.

But do they tap into the resource of dabbawala`s[1] as well? That`s one of the most sophisticated end to end delivery system i have ever seen.

http://en.wikipedia.org/wiki/Dabbawala

I live in NYC and don't have a car. I'm not walking a mile to my local postal center to pickup the 20lbs bag. I Ordered from Amazon so that I wouldn't have to.

To their credit, Amazon overnighted a new order which thankfully got delivered by UPS instead.

I have asked a few Logistics drivers what the deal is and they seem to just be contracting with their own unbranded van, so mileage probably varies a lot.

Apparel will remain safe as long as consumers buy clothing that doesn't fit perfectly.

The following factors can have orders-of-magnitude effects on the costs of the last mile.

* Cycle Times (the time from route start to route finish). If you offer short cycle times, you lower your delivery density (distance between deliveries).

* Market Share. The more customers you have, the higher your delivery density.

* Range. The bigger the delivery area, the further you have to travel at the beginning and ends of delivery cycles. Short cycles with large ranges can add up to very large dead weight losses.

* Street patterns. Street patterns can ease or severely inhibit efficient routing. In a town full of cul-de-sacs, you have almost no flexibility to optimize your routing. In a pure grid, you can optimize extremely well.

* Vehicle requirements. Smaller vehicles are extremely nimble, aren't subject to the same traffic considerations, and don't have problems with parking, ingress, or egress. Larger vehicles can be much more difficult to move around. This is actually a huge benefit to companies like Taobao, and pizza delivery, because they can use motorcycles effectively. Refrigerator Delivery, not so much.

And to compound that, labor and fuel costs are a multiplier for the factors mentioned.

Let's say a driver makes $15/hour working an 8 hour shift, and Amazon's driver salary budget is $0.50 per parcel. Over the course of an 8 hour shift you need to deliver 240 parcels.

You can do that by making a delivery every 2 minutes, starting right at the depot - or by driving 2 hours, making a delivery every 1 minute for 4 hours, then driving 2 hours back to the depot. Or by driving 3 hours, making a delivery every 30 seconds for 2 hours, and driving 3 hours back.