Amazon’s Last-Mile Conundrum...
The trajectory of Amazon’s core retail business is nothing short of astonishing. Originally a bookseller, Amazon is now “the everything store.”
During its history of building out its capabilities of selling everything from anchovies to zesters, Amazon had to solve a parallel problem: How to get all that stuff to everyone in a timely fashion, especially with the introduction of Amazon Prime and two-day shipping.
So, Amazon set up what amounts to an entirely separate, parallel logistics business. You see it every day.
Amazon built an airplane fleet so it would be less reliant on UPS and FedEx air shipping costs.
Amazon also built its distribution centers and warehouses all over the country so that all those products would be closer to the buyer for faster delivery.
Then, it went after that super-duper nagging problem called “the last mile.” That is, the last bit of travel from the warehouses to your front door. To solve the last mile problem, Amazon built out a massive fleet of its own delivery vehicles. That is why, depending on where you live, you are as likely to see an Amazon van pull up to your house as you are a U.S. Postal Service or UPS truck to drop off your package.
So, the company has most of the supply chain under its control. Customer service and satisfaction are at an all-time high. And just in time for the world to hide in their houses with the onset of a pandemic and order everything online. Talk about good timing!
But…
All of those planes and warehouses and vans cost money. Lots and lots of money, including the people to fly, staff and drive them.
So, Amazon comes up with an idea (and it’s a good one, on paper at least): Your Amazon Delivery Day.
About a year ago, Amazon encouraged me to pick a delivery day, meaning rather than have my things delivered piecemeal the next day or in two days, would I be willing to wait until, say, Wednesday, when ALL the orders I placed the previous six days would get delivered. Amazon sold the idea as being more environmentally friendly (less packaging waste and less fuel consumed by those delivery vehicles.) Amazon also offered incentives of a monetary credit toward a digital movie rental, or a Kindle book every time I chose my delivery day instead of instant gratification.
So far, so good.
But…
Amazon may have created a problem for itself that it did not anticipate: Buyer’s remorse and the cancelled order.
I have been using the delivery day option now for about 10 months. I typically think of something I need or want (or think I need or want), order it and my account defaults to my delivery day. And this works just fine. If I really need something right away, I can have it delivered next day or just go to the store and buy it locally. (PERISH THE THOUGHT!)
The problem for Amazon is that choosing my delivery day two, three, five days out makes it very easy to change my mind and cancel the order. Any item that hasn’t shipped is just a button push away from being cancelled. As a result, I have “bought” and then cancelled tens of items over the past few months. It’s a classic example of impulse buying in bed at 11:30 at night and then waking up the next day, seeing the confirmation email and thinking “WTF?” and cancelling. If I had chosen Prime next day or two-day delivery, that thing would already be on the way to my house and I would be far less inclined to take the trouble to return it once it arrived.
So, I am left to wonder: How many more Amazon customers like me are there? And more to the point - is all the money Amazon saves by grouping together purchases to a single delivery day being offset by the cancelled sales from flighty buyers like me?
I am sure Amazon would never say so (I read Amazon’s most recent 10-Q filing and didn’t see anything), but its recent financials and precipitous stock price decline indicate that something is amiss at the company, a huge part of which is still retail sales.
Over the long haul, I am sure this is a problem (if it is a problem) that Amazon will figure out. It is a very smart, very well-run company that will no doubt someday eat the entire world so that everything we do – buy, eat, vote, procreate – will be made faster, cheaper and more efficient right up until the zombie apocalypse forces us to go back to gathering berries and hunting chipmunks for sustenance. But fear not: Amazon will sell us the best and cheapest chipmunk crossbows and deliver them in two days or less.