Amazon hails taxis to make deliveries

Discussion
Nov 06, 2014

It may just be that Amazon.com is pursuing an "all of the above" strategy when it comes to making speedier deliveries to customers. According to The Wall Street Journal, Amazon has tested using licensed cabs in Los Angeles and San Francisco to deliver packages.

With faster deliveries, Amazon is looking to negate the advantage of immediacy that brick and mortar stores currently hold. The company currently uses traditional delivery services such as Fedex, UPS and the U.S. Postal Service, as well as its own trucks in some areas. The retailer also uses regional couriers and lockers in retail stores to get goods in the hands of customers. Amazon is expected to open a location in Manhattan for product pickups, and CEO Jeff Bezos is on the record when it comes to the possible use of drones to make deliveries.

For its taxi test, Amazon used Flywheel, a cab-hailing app competitor to Lyft and Uber, to bring taxis to mini distribution centers for package pickups. The cabs would deliver up to 10 packages in a single zip code for about $5 a package. Amazon used the cabs typically in early hours when drivers had fewer fares.

According to an article on Gizmodo, cabs make sense as a deliver vehicle because they are cheaper than courier services and more direct than Fedex or UPS.

Do you see taxis as a viable delivery vehicle for Amazon and other retailers? What advantages or drawbacks do you see to Amazon using a wide range of delivery methods to get goods into the hands of consumers more quickly?

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18 Comments on "Amazon hails taxis to make deliveries"

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Chris Petersen, PhD.
Guest
3 years 1 month ago
The absolute weakest link in growing online right now is delivery to the end-consumer, especially the “last mile” in peak seasonal. As everyone rushes to become omni-channel in the U.S., no one has enough capacity to get the packages the last mile to the consumer. And if there is a weather glitch like last Christmas, the system breaks. India and China actually have it far easier to expand delivery to consumers literally within four hours of purchase in major cities. In Asia there is a well-established “motorini” of millions of scooters that can zip through traffic, and the labor model is very cheap. Taxis will only work in the U.S. if the costs can be kept to a minimum fee (e.g., $5). If taxis are used in peak periods the cost could be exorbitant. To use taxis will also require Amazon to enable predictive analytics in order to have the right inventory in the right cities. Kudos to Bezos and team for thinking outside of the box yet again. The only real alternative right now… Read more »
Ken Lonyai
Guest
3 years 1 month ago

This really sounds like a stretch. Sometimes innovation can border on desperation and I think that this idea is skirting the line.

While this sort of sounds like a logical approach to enable speedy deliveries, there are so many potential risks here that I do not see it as a long-term viable strategy. Any business that is going to permanently offer same-day delivery is going to have to carefully manage and vet its delivery team and the logistics around it. Cab drivers are an independent lot and not package handlers by nature, so the QC issues here alone are frightening enough.

Max Goldberg
Guest
3 years 1 month ago

Taxis, if there are any left in an Uber/Lyft world, are a great means of delivering packages provided that the cost of delivery can be held to $5 or less. They are readily available and can be quickly deployed.

The downside is that cabs may not be as professional as UPS or FedEx, and once again Amazon is ceding the last mile of delivery to a service that they do not control.

Richard J. George, Ph.D.
Guest
3 years 1 month ago

Absolutely. Amazon recognizes that traditional brick-and-mortar retailers are moving to click-and-mortar. With click-and-collect options, the immediacy of sales fulfillment favors these retailers over Amazon and other pure-play online retailers.

Amazon continues to be the leader in the final mile component of online purchases. At any point in time, Amazon may be experimenting with up to 20 different methods of getting product to the customer (not including drones—LOL).

At the end of the day, victory will go to those companies providing the best convenience, efficiently and effectively.

David Dorf
Guest
3 years 1 month ago

“All of the above” is absolutely the right approach to finding a solution. Amazon is trying different things to find what works, and they may find the answer is a combination of methods. They will benefit from being first and from all the learning along the way. The “wait and watch” strategy isn’t a bad one either. Other retailers can be fast followers.

Taxis are fine in big cities as long as there are controls in place, but I don’t see this taking off elsewhere. But that’s fine as there won’t be a single solution to solve the delivery problem everywhere.

Tony Orlando
Guest
3 years 1 month ago
Again, we are in a world where the Amazon believes that they can deliver to anyone at anytime within an hour. It just can not happen in most parts of our country, as most of it is rural, and costs will soar. There is a reason all these start-ups pick San Francisco, or NYC or Chicago to try out there delivery systems, as they have a shot of some success, which in turn may get them the capital they need to move forward. This is a niche business at best, and profitability is questionable at best. The cost of the products must be raised to deliver groceries door-to-door, as nobody can do it for five or even 10 dollars without adding in some expenses. Call me crazy, but the few consumers who understand the cost, and are willing to pay the true cost of this service, are going to expect amazing service to boot, which is how it should be. This is not a service for the average consumer, rather it is a concierge type… Read more »
Herb Sorensen
Guest
3 years 1 month ago

Back in the day when I was operating a national food laboratory service, I used taxis all over the country as errand runners. In fact, I considered starting a business called “National Errand.” It’s obviously more costly than UPS for moving packages, but typically I was not just shipping—I was, for example, picking up retail samples from far-flung locations.

I LOVE the creativity I see coming out of Amazon! They’re never stuck in “this is the way things are done.” Bloody ‘ell! The world has changed, is changing, and maybe there is a better way NOW. 😉

Herb Sorensen
Guest
3 years 1 month ago

And by the way, here is some extended comment on the whole delivery paradigm: Retail “Spoons.”

Lee Peterson
Guest
3 years 1 month ago

I just have to say congrats to Amazon for really pushing the ideas box. Pretty good stuff between taxis, the Post Office and 7-11 lockers—I mean, they’ll try the wild ideas we’ve been talking to physical retailers about for years. Keep it up and your goal of taking out Walmart will come true!

On the other side of the coin, physical retailers should take note that Amazon is very adept at “fail fast” and that they, in order to compete, should be too. I was at a quarterly briefing once where Les Wexner (CEO of L Brands) said, “I’m afraid to stop and celebrate, I might get hit by a truck.”—indeed.

Bill Davis
Guest
3 years 1 month ago

I don’t know, at $5 per package that seems a little expensive, but maybe in certain circumstances. This just shows Amazon’s willingness to test out new ideas to see which ones make the most sense. And even if this doesn’t pan out at scale, they will likely learn something from this that they can use somewhere.

I am making an educated guess here, but I am assuming these types of deliveries leverage the sortation centers that Amazon has been building out this year.

Kenneth Leung
Guest
3 years 1 month ago

I don’t see it except as a premium service or if it a high-value item. You can’t spend $5 delivering a package unless there are big enough margins. If someone is ordering a high-value small-size item with express delivery, I can see justifying the fare because you can be on par with courier services.

Lee Kent
Guest
3 years 1 month ago

What kind of volume are we talking here? If this is just onesie, twosie then OK, using taxis could be very viable. Like others have said, Amazon is never at a loss for creative thinking.

My other question would be, who is paying the five bucks? If it’s Amazon, I will have to question profitability once again. If it’s the customer, go for it! And that’s my two cents!

Todd Sherman
Guest
Todd Sherman
3 years 1 month ago

The main lesson is that Amazon is set up to try many different things and see what works best—and when. They have the attitude and processes in place to launch, manage and control these experiments.

This is the lesson for other retailers who are looking to connect with their customers in ways that match the new and fast-changing shopping habits and expectations.

In Silicon Valley, this is “fail fast”—which is a great concept but but a bad name. Tech folks sometimes try a little too hard to be cute and catchy. A better way to look at the process might be “learn fast and improve.”

Taxis may or may not prove to be the best way do delivery for the “last mile” but it may work for some situations. It’s easy to trust that Amazon will figure out the right algorithms to determine the best methods for delivery given the product/location/timing/economics.

Zel Bianco
Guest
3 years 1 month ago

There would certainly be a demand for this service. Seamless and other food delivery apps have allowed customers in cities to grow accustomed to ordering a meal online and having it delivered with the hour. However, there seem to be a lot of flaws in this plan.

As others have noted, Amazon has little control of what happens to the packages once they are picked up by taxi drivers. This opens Amazon up to a lot of problems with quality control, service reliability and even safety.

If taxis are only used during off-peak hours, how often would you really be able to take advantage of this service? The time when customers would get the most convenience from this is also the time when they would be in the cabs themselves.

Gene Hoffman
Guest
Gene Hoffman
3 years 1 month ago

Taxi deliveries are applicable but not too viable. If a hectic new Taxi Transportation system were to arise, there would be some loss in delivery control, unintended costs, and dependability. Still it should be tried in a controlled test.

A wider range of delivery methods would place speed against the assurance that more folks added into the system won’t usurp delivery integrity.

Bob Phibbs
Guest
3 years 1 month ago

It’s amazing what you can do with other people’s money. A company fueled by speculation not making profits can throw any idea out and be “groundbreaking.” What’s next? Strapping stuff to dogs in co-op with dog walkers? Geez.

Bill Bittner
Guest
Bill Bittner
3 years 1 month ago

This certainly makes a lot more sense than drones, although outside of industry rags it probably won’t get as much press attention. It is also quite conceivable that “delivery vehicles” will become the first driverless vehicles on the road. This will allow Amazon to continue their service at less cost. You will see a fleet of driverless Amazon vehicles making return pickups and dropping off deliveries before you see people getting in cars without drivers.

Of course it all becomes obsolete when every home has a 3D printer and purchased products simply “materialize.”

Cathy Hotka
Guest
3 years 1 month ago

Sounds like a great strategy for a company that doesn’t need to be profitable. Other companies won’t follow suit.

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