Fascinating piece over at Slate on Amazon’s move to make next-day deliveries standard and same-day deliveries possible:
But now Amazon has a new game. Now that it has agreed to collect sales taxes, the company can legally set up warehouses right inside some of the largest metropolitan areas in the nation. Why would it want to do that? Because Amazon’s new goal is to get stuff to you immediately—as soon as a few hours after you hit Buy. …
It’s hard to overstate how thoroughly this move will shake up the retail industry. Same-day delivery has long been the holy grail of Internet retailers, something that dozens of startups have tried and failed to accomplish. (Remember Kozmo.com?) But Amazon is investing billions to make next-day delivery standard, and same-day delivery an option for lots of customers. If it can pull that off, the company will permanently alter how we shop. To put it more bluntly: Physical retailers will be hosed.
Let’s leave aside the hosing of the physical retailers, which is likely for retailers like Best Buy whose marketspace Amazon eats up entirely but less so with retailers like Target and Wal-Mart, which rely more heavily on grocery and clothing sales.
What I’m interested in is the effect this will have on UPS. What percentage of packages delivered by UPS comes from Amazon? 5%? 10%? More? Less? I have no idea. There’s no doubt that e-tailing has been a boon for UPS and Fed Ex, but it’s unclear to me what percentage of that comes from Amazon specifically. I’m guessing it makes up a plurality if not an outright majority. All I know is that when UPS makes a delivery to my apartment building, about one in four of the boxes has the Amazon logo on it. I assume Amazon has worked out some sort of bulk rate, but still: Losing that business would be a huge hit for UPS, right? Perhaps Amazon will work out some sort of deal with the company where they serve as the on-the-ground delivery company for the new Amazon distribution centers?
I’m just spitballing here. If anyone has more concrete data, I’d love to see it.
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As an IT guy, I really want to see the software that manages Amazon’s supply chain. I have to imagine that it’s really really awesome, given how Amazon has revolutionized supply chain management.
It’s not super-uncommon for retailers to only utilize big carriers like UPS for last-mile delivery. I’m not familiar with Amazon’s supply chain, but I suspect UPS is only part of the system. I’d also be really curious to see how Amazon works drop ship into the mix for this same day stuff…