As Amazon raises the logistics bar with one-hour delivery, what comes next?
Amazon [IRDX RAMZ] has once again raised the bar for fast delivery. New York shoppers can now take possession of their Amazon purchases in little over an hour.
The retailer introduced its Prime Now quick delivery service in Manhattan on Thursday, with superfast fulfillment made possible through the use of bike couriers. Members of Amazon’s Prime scheme can use the PrimeNow mobile app to order essentials such as shampoo, books, toys and batteries between 6am and midnight, seven days a week, for delivery in nine Manhattan postcodes. Delivery within an hour will set buyers back by $7.99, but two-hour delivery is free to Prime members.
The service is run from Amazon’s Manhattan hub on 34th Street.
“There are times when you can’t make it to the store and other times when you simply don’t want to go,” said Dave Clark, Amazon’s senior vice president of worldwide operations. “Now Prime members in Manhattan can get the items they need delivered in an hour or less.”
Next year Amazon is set to take the service to other cities – though there’s no news yet of a London launch.
The service, similar to that already offered in the UK by retailers using eBay-owned Shutl to deliver from local stores, breaks new ground for a pureplay. Internet-only firms are usually constrained by their warehouses but in recent years Amazon has invested in building hub depots that enable same-day delivery to some cities in the UK and the US.
The retail giant is, of course, looking beyond the use of relatively low-tech solutions such as bike messengers. It’s developing drone delivery that could make delivery yet faster. The technology, which Amazon first unveiled as a research project just over a year ago, has not yet won clearance from the FAA for commercial use in the United States.
But Stefan Schmidt, VP of product strategy at hybris [IRDX VHYB], says such technology would be particularly useful at this time of year. He says drones would be particularly useful in the supply chain and in logistics, keeping stock and inventory levels in balance.
“In a heavy demand period such as Christmas, it’s critical that retailers maintain an accurate view of stock from their back office systems, store and warehouse locations in order to ensure maximum turnover of inventory,” said Schmidt. “Where drones could potentially play a role in the future is by replenishing stock levels continuously (between warehouses and between stores). This would ensure less of a requirement for brands to ‘guess’ how well certain products will perform ahead of key trading periods (especially as drones are modified to carry heavier deliveries).
“In this way drones provide the potential for an almost entirely new supply chain route – essentially a road in the sky that’s connected in real-time in order to update and balance retailers’ supply based on demand. The implications of this are that currently implemented centralised distribution systems like that of DHL, UPS, FedEx could change significantly in order to better tackle future deliveries in dense metropolitan areas using drone technology.”
Darryl Adie, managing director of Ampersand Commerce [IRDX VAMC], says the announcement will push retailers with less high-flying ambitions to make sure their fulfilment approaches match customers’ expectations.
“One in three UK consumers consider same day delivery to be the most useful delivery option,” he said, citing Ampersand research of earlier this year. “Demand for within the hour delivery is almost certain to increase next year in the UK but this in turn will bring its own problems. Retailers will need to have a competitive fulfilment strategy with accurate order tracking to ensure that orders and dispatches run smoothly. Retailers with owned fulfilment will be best placed to compete. Additional warehouse locations and smart pre-emptive stocking based on local buying behaviour may also need to addressed in order to ensure that services can be provided as quickly as possible.”
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