Amazon Prime users pay for a lot of privileges that pay for themselves, especially around the Gift Giving Season. Sure, I like the millions of songs, the streaming television, free reads and loads of other goodies, but what drew me in was free two-day delivery.
It’s a premium service that can save you hundreds if not thousands of dollars a year by getting you stuff you want two days after you decide you want it with free 2-day shipping, from a list of millions of items. But it’s not foolproof. Amazon has long had to rely on third-party carriers to keep their two-day delivery promises. Arrangements that cost them a small fortune in refunds a few “gift-giving seasons” ago when volume exceeded capacity. To remedy that the online retail giant has been trying a few things that give them more control over last-mile logistics. They are looking at getting into the package delivery business.
If you’ve heard me talk about where I think New Hampshire needs to focus its infrastructure dollars, then you know that (IMO) dumping money every other year into commuter rail studies–or commuter rail itself–is a colossal waste of Granite State resources. Commuter rail is a money-losing Progressive boutique agenda item with no short or long-term benefits. I’d like the legislature to stop fooling around with ancient transportation models and pay attention to the future, particularly in a rural state like New Hampshire.
Internet commerce needs roads to get product from warehouses and distribution centers to business owners and consumers. That is where the world is going. And Amazon (like them or not) is readying itself to meet the challenge of keeping its two-day delivery promise.
It launched Amazon Flex, which uses independent contractors driving their own vehicles to deliver packages from Amazon shipping hubs, guided by a smartphone app. Prime Now offers a limited assortment of products, such as phone chargers and bottled water, in as little as an hour to shoppers in many cities.
This is the Uber and Lyft model I mentioned at the link above for last mile delivery. It’s real, it’s happening, its encouragement can generate more “precious” tax revenue without adding new taxes, and it uses roads and bridges. And for the past two years, the world’s largest internet retailer has been testing out more invasive logistical solutions to ensure the 2013 Holiday delivery disaster doesn’t cast it’s shadow on them again.
Amazon.com Inc. is experimenting with a new delivery service intended to make more products available for free two-day delivery and relieve overcrowding in its warehouses, according to two people familiar with the plan, which will push the online retailer deeper into functions handled by longtime partners United Parcel Service Inc. and FedEx Corp.
The service began two years ago in India, and Amazon has been slowly marketing it to U.S. merchants in preparation for a national expansion, said the people, who asked not to be identified because the U.S. pilot project is confidential. Amazon is calling the project Seller Flex, one person said. The service began on a trial basis this year in West Coast states with a broader rollout planned in 2018, the people said. Amazon declined to comment.
I can’t help but think UPS and FedEx are crapping their pants. Even the Postal Service, which can’t survive without a regular diet of billion-dollar-taxpayer bailouts could lose a fortune to a distribution model that diverts packages from their carriers to freelancers or any Amazon-owned/supported last-mile solution.
I think that’s outstanding.
And I am intrigued, not because I’m a customer and a Prime Member, but because such intrusions force the competition to find efficiencies of their own.
People hate Wal-Mart for whatever reason they want to hate Wal-Mart, but Sam Walton’s little retail chain revolutionized retail, logistics, and the global distribution system. To pass savings to customers, Wal-Mart asked everyone to find savings at every point in their manufacturing and distribution chain. The desire to be part of a multi-billion dollar business drove innovation. It challenged ideas about how things got done. And at the end of the day, it makes more things accessible to more people for a lot less money. Their money.
Amazon makes promises it would like to keep. So, it has forged ahead with a plan that will not just help them keep their promise; it will force carriers like FedEx and UPS to find ways to retain as much of that “last mile” business as they can. Innovations that could help them capture the business of Amazon competitors like Wal-Mart whose adoption of a free 2-day delivery model without a subscription service inspired Amazon to hustle its own changes.
Every customer of these carriers could free up a small fortune in savings from lower shipping costs; money freed up for other purposes at every point in the distribution chain.
Innovation, competition, it works for you.
Which brings me back to the US Postal Service and wasted resources.
The Postal Service can’t possibly compete, but since they can and do operate a loss, they’ll remain relevant for now. But that “relevance” represents billions of tax dollars wasted and if you’ve been paying attention the point is to get away from that. To find better uses for that money, including not taking it in the first place.
But the government has no incentive to look for efficiency–it, in fact, tends to do exactly the opposite–so we shouldn’t expect privatization anytime soon.
But a private postal service would open first class mail to competition that invites its own efficiencies, cost savings for consumers, and more work for those last mile freelancers and innovators who might become business owners themselves.
It could happen.
Not that long ago no one imagined what Amazon would become. That will happen again if we can just keep the government out of the way.