Amazon Unveils One-Hour Delivery Service
wsj.com
wsj.com
The selection is pretty decent, definitely comparable to Google Shopping Express.
One very odd note though: they ask for a variable tip to the delivery courier (something Google doesn't do). So even for "free" 2 hour delivery, you're paying for delivery. While I see how this is better for the courier, I think it's a big mistake—people hate navigating the social dilemma of how to tip properly, and solving social dilemmas is a key advantage of digital services.
I'd vastly prefer doing away with tips altogether and just paying a living wage, but the least these services can do is to spare me extra work.
For corporate deliveries, tip online according to corporate policy, no personal decision needed.
Tipping is helpful when there is likely to be a high variation in customer service.
In a small-item delivery scenario the customer-vendor interaction is 0-15 seconds. How much tipping variation do you expect there to be?
Tipping is a truly toxic practice, and it's a burden on customers as well. Why would anyone want to be assigned extra work to evaluate how unhappy they are in order to calculate how much extra they should pay?
Could you please elaborate? I don't see how tipping can be involved in ripping off workers in the United States.
Employers are always required to pay their workers minimum wage - the federal minimum wage in the worst case, and sometimes the state minimum wage when it applies and is higher. See: http://www.dol.gov/elaws/faq/esa/flsa/002.htm
> If an employee's tips combined with the employer's direct wages[] do not equal the federal minimum hourly wage, the employer must make up the difference.
Either way, they're the ones paying.
We see it as "that waiter was nice, leave a generous tip".
Employers see it as "if they don't do a good enough job they won't make any tips, and the problem will naturally work itself out." This is patently unfair because it treats tips as implied expected income, and wages are set so low that you can't make a livable income without them. This is patently unfair.
Which I found to be quite wrong. I didn't have a single experience of bad service in my week in Paris.
This arrangement isn't free or magical. It exists because of the cultural wrappings.
What irks me the most is that tipped industry veterans will declare, very forcefully, that 20% is the minimum in all circumstances -- which is somewhat fair, as I do believe in fair wages. However, if a minimum exists, why are we even tipping?
Countries without tipping happen to compensate their employees with something called 'wages'.
It goes a long way to developing a real service culture and not fake 'yes sir thank you sir' service in the US
Of course, my sample size is too small to say anything conclusive. After it felt like I was noticing a pattern a couple of times I just switched back to tipping cash.
My vague guess is that if you leave an above-average tip on an online order, the order gets immediately grabbed my a delivery person since they know they'll get at least that much of a tip.
Be an interesting thing to really do some research on, though.
I will say I tend to agree that I'd rather see employees be paid a higher rate by the company itself and then have their performance monitored and be rewarded or punished accordingly. I've worked in a few places that paid hourly folks $14+ an hour, in parts of the country where that was pretty decent money for a job you get get off the street, and they managed to keep really efficient employees who did their jobs well.
Next time I order delivery I'll have to try a giant tip and see what happens.
Why does every job have to pay a "living wage"? Almost all the pizza delivery folks I knew were doing it part-time for extra cash. Pizza delivery is not a long term career. This notion that every job is a career job is just silly and is detrimental to our youth trying to pick up extra cash and some experience.
My personal belief, and I'm more than willing to pay more for goods and services to support it, and I live in a country where we have a liveable minimal wage, is that every job if worked 40 hours should be enough for a very modest, but not totally hopeless life. You also then have time off to use to improve yourself via school or some other way.
If you're working back-to-back jobs 80 hours a week that pay nothing you have zero time for yourself, zero time for good planning and zero time to attend any kind of classes.
Being poor and desperate impairs your ability to think, plan and change yourself{1}.
1: http://psych.princeton.edu/~psych/psychology/research/shafir...
Edit: the thread is too long for me to reply to the responses below. What an unfortunate design HN, as the "right of reply" has effectively been stripped from me.
That's an appeal to emotions and has nothing to do with the argument.
> My personal belief, and I'm more than willing to pay more for goods and services to support it, and I live in a country where we have a liveable minimal wage, is that every job if worked 40 hours should be enough for a very modest, but not totally hopeless life. You also then have time off to use to improve yourself via school or some other way.
You are more than willing to pay more, but the very people you talk about who need cheap goods and services to stretch a budget don't have that extra money. The forcing of every job to be "living wages" removes a part of the labor force that is willing and able (due to parents or other income) to provide services for less money. Removing part-time, dependent labor from the the market increases the costs of goods and services for everyone and screws poor people. You might feel better, but it has a detrimental effect.
> If you're working back-to-back jobs 80 hours a week that pay nothing you have zero time for yourself, zero time for good planning and zero time to attend any kind of classes.
This is a different issue. This is the disappearance of full-time, low skill jobs. There are many factors including changing laws that have impacted this area. Our current bad economy and companies preparing for changes in health care laws are two. Worsening the situation by raising the minimum wage is only going to get more people fired / hours reduced or speed automation (McDonald's self ordering machines).
Doing something to help people get an education or training is one thing, eliminating a whole class of workers that make goods and services cheaper is a problem.
I remember the paper, and remember a negative reaction, but do not have time to read and find my sources on it again.
You keep repeating how the suggestions will make things more expensive for poor people. We're suggesting to pay poor people to not be poor.
"We're suggesting to pay poor people to not be poor."
I'm suggesting that the best bet for poor people is to provide a path to training that allows them to have jobs that are higher value to employers. Making low value jobs cost more doesn't help. It hurts as these people don't have high value skills and you are removing spending money from others that could be in the workforce.
This, and I think every one of your points, can be sufficiently addressed with one word: Australia.
My 19 year old unskilled housemate gets paid minimum wage $21.08 per hour as a casual.[1] She works 4 days a week and supports herself just fine. They say the cost of living is high in Australia, and it is -everything is expensive here- but we have options: we live in a share house and pay $100 a week per room (four of us) including electricity and Internet. She doesn't own a car, and doesn't smoke cigarettes or drink alcohol. Financially she isn't struggling at all.
The minimum wage for full time employment is $16.87 per hour, which includes 10 day a year sick leave and 20 days a hear paid leave.[1]
Also, because everyone here is paid a 'living wage' we're able to afford to pay social welfare. 'Newstart Allowance' is paid to unemployed job-seekers at $515.60 per fortnight.[2] It isn't a lot, below the poverty line apparently, but it is enough to rent a room buy food.
I do not think any of your arguments hold water.
1. http://www.fairwork.gov.au/about-us/policies-and-guides/fact...
2. http://www.humanservices.gov.au/customer/enablers/centrelink...
This, and I think every one of your points, can
be sufficiently addressed with one word:
Australia.
My 19 year old unskilled housemate gets paid
minimum wage $21.08 per hour as a casual.[1] She
works 4 days a week and supports herself just
fine. They say the cost of living is high in
Australia, and it is -everything is expensive
here- but we have options: we live in a share
house and pay $100 a week per room (four of us)
including electricity and Internet. She doesn't
own a car, and doesn't smoke cigarettes or drink
alcohol. Financially she isn't struggling at all.
The minimum wage for full time employment is
$16.87 per hour, which includes 10 day a year
sick leave and 20 days a hear paid leave.[1]
I'm not sure a frugal person with 3 roommates making 25% above the minimum is a good example.
Also, because everyone here is paid a 'living
wage' we're able to afford to pay social welfare.
'Newstart Allowance' is paid to unemployed
job-seekers at $515.60 per fortnight.[2] It isn't
a lot, below the poverty line apparently, but it
is enough to rent a room buy food.
I do not think any of your arguments hold water.
The argument is high minimum wage cuts youth and unskilled employment and removes a class of worker from the workforce. Looking at [0][1], I think the trends show just that.
0) http://www.ausstats.abs.gov.au/ausstats/meisubs.nsf/0/333D19...
0b) small side note: I do wonder why the change to this reporting is occurring according to
1) http://www.aph.gov.au/About_Parliament/Parliamentary_Departm...
2) http://www.smh.com.au/federal-politics/political-news/christ...
3) http://www.bloomberg.com/news/2014-12-09/abbott-removes-poli...
4) http://www.brisbanetimes.com.au/national/tertiary-education/...
You can probably reply now. IIRC, there is a delay in the reply link being available for long threads, as a very blunt measure to reduce fast/long back and forth arguments.
For unskilled labor a career might be a job.
I would agree with that. However, I don't order enough pizza to be a "known" customer. If I had a rapport with a particular service vendor, I wouldn't mind tipping up front, provided that they have demonstrated a consistently high level of service prior.
Like many people, I have a lot of options when it comes to who I buy from. I now have to pay sales tax to Amazon, and there are often other vendors who are cheaper, or charge no sales tax, or have stores five minutes away where "shipping" is instantaneous and always free for even the smallest purchase. Even so, I'll often pay more and buy from Amazon anyway because of their service. Anything that reduced their service quality would shift some of those purchases away from Amazon.
I haven't seen this new Amazon system for myself yet, so maybe there's no real problem, but if "free" 2-hour delivery turns out to require air-quotes around the "free" along with a nudge, nudge, wink, wink, "it would be a mistake to disappoint me" attitude from the delivery guy, I'll use the system a lot less.
For me, avoiding that 15-20 minutes of annoyance is well-worth calculating and paying a tip. (Agree that that's a negative, but it's relatively small negative.)
In the former case, it's unlikely that the tip would impact my decision; in the latter, it very well might. In either case, it goes in the "con" category and, at the margin, changes some fraction of my Amazon-yes-or-no purchase decisions, always in the direction of no.
From a selfish perspective: a few extra dollars can make a huge difference in service, particularly services you use repeatedly.
From a humanity perspective: a few extra dollars can also make a big difference in the life of the person you're tipping...usually jobs with tips do not pay very well.
[1] https://www.google.com/shopping/express/
I'm not sure that wording is accurate. Google is leveraging the brick-and-mortar companies to compete with Amazon and collect more data about its users. Arguably some of the most valuable data they could get; spending and buying habits.
I doubt Target is thrilled that Google is looking to inject themselves as a middleman between them and their customers. Target has historically leveraged customer buying habits pretty aggressively [1]. I'd be surprised if their execs aren't frantically trying to figure out how to keep Google from "helping" them compete with Amazon.
[1] http://www.forbes.com/sites/kashmirhill/2012/02/16/how-targe...
Almost all of Google's profit right now is derived from B2B relationships. Providing services to other businesses is what they do. Yes, they make a good profit while they're doing it, but to suggest the business who are google's customers don't see any benefit from it is silly.
It would be silly to imply that Google's customers don't see any benefit as they're obviously getting some revenue and data.
But it would be similarly silly to imply that Target participating in the program doesn't mean they're concerned about it and not looking for ways to handle the customer's experience end to end.
No. I order stuff from Target via Google Shopping Express multiple times a week without a loyalty card. I didn't even know Target had loyalty cards, in fact! Also if you're logged into your account you go go here and see what loyalty cards you can type in: https://www.google.com/shopping/express/#SettingsPlace:
The list includes Costco, REI, Staples, etc. but not Target.
Target could compete effectively with the Google and Amazon offerings by adding delivery to their Cartwheel app.
Now, for prime members in NYC at least, Amazon is a viable option.
What other moats do local stores have? Amazon wins on:
* selection
* cost
* convenience
* reputation
* knowledge (this depends on the local store)
* feel good factor (supporting local business and employment)
* hold the item in your hand (not sure there is one word for it in English, but the Germans probably have one)
* I need it now
I often do reverse show-rooming. I'll browse through a real bookstore, which is fun, but I'll look up reviews on mobile and factor that into my buying decisions.
This is my use-case. For my small corner of the world, Amazon has been a boon to used-book stores (even regional chains), as it is now easier to see what I'm buying.
As for convenience, those without a doorman always think twice before placing orders online.
I think that's one of the major gains of cheap/free fast delivery. It's easier to order if you know you'll get it during the next hour or two when you'll be at home, instead of "tomorrow".
I think in the long-run, it'll be price.
Sure, in the short-term, Amazon can do what they do and undercut on price, but in the modern age, Wal-Mart has pretty much figured out the optimal model of inventory storage/distribution and the model of keeping inventory on-hand and having customers come to them enables them to do this at an incredibly large scale and at razor-thin margins. Yet they are still margins.
As we have seen before, delivering products at that scale and selection via delivery is extraordinarily challenging to do profitably. Amazon can do a lot of things, but one thing I don't think they will ever be able to do is bring products to peoples' doors at a cheaper price than Wal-Mart can store inventory in large stores and distribute to customers who come to them. There are just too many complexities around the delivery/customer service/quality control processes to make the economics work out.
But this is going into New York City. And the flipside is that you can't put a Wal-Mart in the middle of NYC -- it's cost prohibitive. So it's not clear that this initiative even competes with Wal-Mart really. And brick and mortar stores in the middle of an expensive city have huge real estate costs, so it's difficult (though not necessarily impossible) for them to compete on cost the way Wal-Mart does.
So let's supposed that this can be done profitably in New York. New York is a special case in a sense, that it is one of the most densely-populated areas on earth, and so deliveries do scale there in a way they don't elsewhere. But then what is the play in a place like Atlanta, Dallas, or Los Angeles, where driving is essential and addresses are wildly irregular?
http://www.nj.com/mercer/index.ssf/2014/07/amazon_warehouse_...
In fact, Sam Walton knew this. His mission wasn't to dominate the world of retail, it was to bring the same economies of scale urban retail already had to rural communities.
Keep in mind that physical storefronts have costs too. Wal-Mart has warehouses too, and they're probably simpler, but when all you have is warehouses, there's a lot of complexity you can add and still have a simpler, more cost-effective model than employing battalions of people to operate cash registers and stock shelves in thousands of small towns and suburbs across the country.
There are Wal-Marts all over big cities, though. Public transit takes you to them.
Amazon's new service is more expensive than public transit. Also, you also don't get any exercise when using it, whereas many people like going out for a walk. That's a minor point though.
It's probably more accurate to say "There's a mismatch between Wal-Mart and San Francisco." Possibly cultural.
By and large Walmart is a suburban phenomenon. They're trying to move into the cities because they don't have anywhere else to expand, but the assumptions underlying big box stores aren't going to hold up in that environment and they're going to become just another brick-and-mortar retailer, with all the costs that entails.
It just seemed odd to say that Amazon has an advantage where Wal-Mart doesn't. The announcement says Amazon is offering the service in Manhattan, but there's a Wal-Mart supercenter just 30 minutes away: http://i.imgur.com/oHS2h43.png
Do you feel Amazon can make good headway in dense city areas? It seems like if Wal-Mart can't figure out how to organize distribution pipelines in a given area, then Amazon wouldn't be able to, either. So I was just trying to figure out what critical advantage Amazon might have.
(Also, New Yorkers don't drive. So that Wal-Mart in New Jersey is closer to an hour away by transit.)
That's 30 minutes (each way) of my time, though. No such problem with delivery.
They once were, but I've noticed a marked improvement lately. The newly opened Walmart locally is very nice, clean, and well lit. The local grocery is a dump in comparison[1].
1) no, I don't have this home town sympathy for the local grocery store since it did some bad things in the past that makes Walmart look like a saint in comparison.
That only works because people don't value their time it takes to get to Wal-Mart and shop there.
Actual "local" stores seem highly unlikely to win on price.
I suspect that Amazon and others will solve the "showroom" problem in the not too distant future, for the handful of products where that actually matters.
Other than brand loyalty, I don't see any obvious niche that a local store could do better.
I shop at Amazon Fresh in Seattle sometimes, and the selection is significantly trimmed relative to pretty much any local grocery store I can walk into. The tradeoff is the convenience of not having to go to the store and spend my time traversing the aisles.
That being said, it might make sense to keep the selection artificially small for multiple reasons.
If a store is close to your commute route, for example, the delivery costs will probably never be low enough to match with that.
I would also dispute on knowledge. In this case, knowledge is a matter of time: you can always google exactly the product you need, but that's going to cost you time. If you're not sure about the exact specifications of what you need, reading reviews isn't necessarily going to help either. Salespeople, if available, can tell you what you need and what's the best cost-benefit (probably leaning towards the more costly).
There's an additional aspect you didn't account for: entertainment. I don't get entertainment off of shopping, but i know a lot of people do. You get some of that while looking things online, i.e. 'browsing' items, but it's not the same experience. Also, shopping is often tied to other entertainment like eating out, movies, etc -- this is done strategically for mutual benefit of mall venues -- and of course can't be replicated online.
It's easy to imagine even if the whole catalog of Amazon were available today for 1-hour delivery for $7.99 (or less), a big part of the average urban dwellers' shopping would still be done offline.
I think it's not if it is "close," but if it's "convenient" to your commute route -- in terms of location and/or commuting method. If I am in NYC and I need to get off the subway, walk a half block, get the item, and then walk back and get not he subway; I might not want to do it, depending on the item. If I'm somewhere where I'm driving my commute, I might not think twice of driving five minutes out of my way and I can pick up almost anything. If I'm riding my bike to commute, I might easily be able to stop, but I might not be able to carry it.
You could get one of these: http://www.christianiabikes.com/en/ :)
I see a lot of then in Copenhagen these days. Mostly families though, since they use them to carry both kids and shopping. Also probably requires a certain infrastructure to work; you wouldn't want to ride one of those in traffic (esp. with kids), only in dedicated bike lanes.
As for knowledge, I think that it is a mixed bag--I've been in stores where the staff outclassed most anything I could find on the internet, and others where, let's just be charitable and say that the staff was lacking.
With this development that "short notice" protection doesn't seem so concrete.
For example, try buying a car fob battery -- in my case, a cr2016. You'll see dozens of such batteries, some name brand, some not. But if you read the comments, you'll find that even the purportedly (from the listing name and image) name brand batteries often aren't. eg [1] After spending 30 minutes trying to find a single listing that actually would send me a bloody name-brand, within expiration date battery, I just gave up. This was far more hassle than just going to my local hardware store.
Another place amazon is very vulnerable is personal / body goods and food. I'm fine buying books and flashlights from them, but for food, deodorant, sunblock, lipsticks, etc, I want real goods not fake ones. Ideally purchased by amazon directly from the originating company. Instead, I'm confident that when you purchase those goods, even if directly from amazon and not one of the marketplace vendors, amazon will look to find the closest warehouse with such an item in it (even listed from one of the marketplace vendors) and send that to you. Amazon also makes it quite difficult to just purchase directly from amazon and not from a marketplace vendor. I think there's going to be a huge scandal when people realize lots of those goods are fake.
[1] http://www.amazon.com/Energizer-CR2016-Lithium-Battery-5-Pk/...
I'll do my best to support my neighborhood hardware store, but I'll definitely delegate many purchases to Amazon Prime delivery if it means saving a trip to Target, Best Buy, or other big box store.
The ones that provide something extra will raise their prices and be more expensive, and people will go when they're willing to pay the difference; look at the independent book shops in London as an example.
It's a romantic idea and all, but beyond that I don't think "local vendors are de facto a good thing" is a reasonable starting point.
But that's all it is; a different allocation of wealth. If you happen to live in that community, great.
The question becomes: why should I care about your local community as opposed to some other local community, or even the global community, that stands to benefit from getting more for less?
And how about returns? Can I return stuff in one hour too?
For Amazon Prime users, I could very well see returns piggybacking on deliveries - the delivery courier would simply pick up the return.
Amazon has been building warehouses all across the country near cities to reduce shipping times. But the retailers already have what amounts to hundreds of warehouses at every population center, plus the inventory management systems. Why haven't they put their inventories online and offered same day delivery to neutralize Amazon?
It's so obvious that I'm guessing they've done the math and it doesn't work.
Big retailers are focused on maintaining optimum levels of inventory at their big box stores all over the country.
It's a different problem.
Very interesting how ideas from the first bubble re: brick-and-mortar are coming back.
I still see the dairy truck and the Schwan's truck in my neighborhood from time to time. They're not exactly the same thing, but they've proven long-term sustainability for some parts of the market. I also see home delivery trucks for King Soopers (Kroger) and Wal*Mart in my area.
If Dominos can do it for pizzas, amazon can do it for much bigger ticket items.
PLUS they are not incurring the cost of shipping the item to a prime member. Right now for every physical good prime purchase they spend money on shipping.
Also see: Amazon is not worried about short term profit [1]
They have probably planned to not profit for a while in exchange for increased cashflow. Again for Amazon, profit isn't first, the customer is.
[1] http://www.businessinsider.com/amazons-jeff-bezos-on-profits...
Amazon is going to lose money on this, and it will probably only ever be feasible (even as a net loss) in a handful of zip codes in the US.
Second, one can both support capitalism as a system and dislike some business practices.
Third, there is no guarantee that offloading salaries onto tips will result in maximising shareholder value since it could result in less customers using the service.
In a market where there is an oversupply of labour, a free-market race to the bottom results in significant suffering over a large number of workers while benefitting a small number of the already-wealthy. It is difficult to view this as a socially desirable outcome.
(if you don't remember Kozmo, this was done by a reporter during the last dotcom boom/bust as a joke)