Amazon Tests Bike Messengers for One-Hour Delivery in New York City
New Project Called Amazon Prime Now and Mimics Immediacy of In-Store Shopping
Amazon is testing plans to offer deliveries within an hour in New York City by using bike messengers. WSJ’s Shelly Banjo joins the News Hub. Photo: Getty.
In its latest attempt to take on brick-and-mortar retailers, Amazon.com Inc. is testing plans to offer deliveries within an hour in New York City by using bike messengers.
The new service is being referred to as Amazon Prime Now and mimics the immediacy of in-store shopping by bringing some merchandise to customers in Manhattan within one hour or two, according to a person familiar with the test.
On a recent afternoon, bike messengers working for Amazon could be seen filing out of the back of a building on West 34th Street just steps from the Empire State Building, where the e-commerce giant recently signed a 17-year lease.
Amazon has been holding time trials with messengers from at least three courier services to pick the speediest and most careful for its delivery fleet, the person said. During the trials, messengers are given an address and told to bike there within the allotted time. Once they arrive, they are required to take a photograph of the building’s address and return to the ground floor of the Amazon building, which is referred to by bike messengers as “the base,” the person said.
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At the base, Amazon has built a lounge replete with foosball, pool and air hockey tables; an arcade; and other amenities for messengers hanging out between deliveries, the person said. Messengers are paid around $15 an hour and work eight-hour shifts.
Amazon has built its reputation on the promise of greater inventory and lower prices than rivals operating brick-and-mortar stores. It has trouble competing, however, when people need something right away. Meanwhile, traditional retailers like Macy’s Inc. and Wal-Mart Stores Inc. are rolling out same-day delivery services in parts of their sprawling store fleets.
As a result, the Seattle-based retailer is erecting more warehouses close to urban centers and is experimenting with such delivery options as the broader rollout of a same-day grocery service, drones, storage lockers and its own trucking network to further cut delivery times. Amazon earlier this year even enlisted taxis to drop off packages.
Amazon has offered a same-day service in more than a dozen American cities, where shoppers who pay $5.99 per order and order by noon can receive their items by 9 p.m. the same day. Shoppers who aren’t Prime members pay $8.99.
The Amazon Prime Now test marks the company’s first U.S. foray into superfast delivery. The name also suggests it may be another of the benefits that Amazon is rolling out to encourage shoppers to sign up for Prime, which costs $99 a year and offers unlimited, free two-day shipping and free streaming video, among other goodies. This month, Amazon unveiled its own line of private label diapers available only for sale to Prime members.
Some analysts estimate Prime members spend twice as much with Amazon than do regular customers.
Amazon faces a bevy of challengers offering one-hour delivery, including eBay Inc., as well as startups like WunWun Inc. and Postmates Inc. EBay has scaled back the ambition of its eBay Now service, which dispatches couriers to stores to retrieve merchandise, acknowledging the difficulties of one-hour delivery.
Meanwhile, car-for-hire company Uber Technologies Inc., which last week disclosed a $41 billion valuation, launched its own bike-courier service in New York City called Uber Rush earlier this year. Some investors believe the value of Uber is in its capabilities as a logistics network, rather than its core service of dispatching cars to give rides to customers.
Amazon has experience with the challenges of one-hour delivery service, having invested in Kozmo.com, a startup that expanded too quickly and flamed out in 2001.
Amazon has disclosed little about the 34th Street site beyond a statement last month saying it had leased the entire building and would use it primarily as an office space. It will also receive $5 million in tax credits from New York state to create 500 jobs over 10 years at the new location. The Wall Street Journal reported in October the site would serve in part as a mini-warehouse, enabling customers to make returns and exchanges and pick up orders made online.
