Photo: Amazon
Will Amazon’s two-minute pickup service appeal to students?
Daphne Howland
Through a special arrangement, what follows is an excerpt of an article from Retail Dive, an e-newsletter and website providing a 60-second bird’s eye view of the latest retail news and trends.
Amazon.com last week announced a new free “Instant Pickup” service for Prime and Prime Student members, who can order from a selection of daily essentials for pickup in two minutes or less. As usual, returns are free.
The service is now available at five of Amazon’s fully-staffed pickup locations in Los Angeles, Atlanta, Berkeley, CA, Columbus, OH, and College Park, MD, and that will expand in coming months. Amazon operates 22 staffed pickup locations on or near college campuses nationwide. Items available for Instant Pickup include snacks, drinks and electronics, including some of Amazon’s most popular tech devices.
“As shopping behaviors continue to evolve, customers consistently tell us that they want items even faster,” said Ripley MacDonald, director, student programs, Amazon, in a statement. “Whether it’s a snack on-the-go, replacing a lost phone charger in the middle of a hectic day or adding Alexa to your life with an Echo, Instant Pickup saves Prime members time.”
Instant Pickup appears to be the next step on a continuum of fast delivery from the e-retailer — starting with free two-day delivery for Prime members and expanding in recent years to next day and same-day delivery — but two-minute pickup is another ballgame.
“While fast delivery has been at their core for a long time, the combination of speed and pickup is a different model than two-hour delivery, or pickup from a locker,” according to Luke Starbuck, VP of marketing at customer care automation firm Linc. He suggested in an e-mail that the retail giant may be eyeing a convenience store chain for acquisition to exploit the full opportunity.
Amazon’s Instant Pickup offering will require tight control of inventory, which can be especially difficult for food items, according to Tushar Patel, CMO of omnichannel solutions platform Kibo. He added, “Snacks and beverages are also items that tend to be more impulse purchases. It’s unclear how much foresight consumers will have to get on their phones to order these items first, rather than walking into a store to select an item and walk to the checkout.”
Discussion Questions
DISCUSSION QUESTIONS: Do you see Amazon’s Instant Pickup service being limited to students or is it a much broader opportunity? What will be the keys to the service’s success?
Poll
BrainTrust
Jon Polin
Cofounder and President, StorePower
Cathy Hotka
Principal, Cathy Hotka & Associates
I think Amazon jumped the shark with this. It’s actually an added step to just going to the store for daily essentials.
Two-minute pickup? Uh … wouldn’t that be called a store?
The concept sounds exciting and I’m not surprised to see Amazon go there, but it throws them into the same dilemma brick-and-mortar retailers have faced for centuries — what’s the right location? If it’s not convenient to the shopper it is of little incremental use compared to the closest convenience store or Best Buy. Partnering with a c-store chain (or as Target has done with Barnes & Noble’s campus bookstore division) could take this to a much more viable level in a hurry however.
Location is and will continue to be important. But it’s how the location is being used, in concert with technology, to deliver value to the consumer that matters.
Many thought that mobile ordering for Starbucks wouldn’t go anywhere when they launched. They’re now accepting something like 1M mobile orders a month with a double-digit percentage of people paying through the app. Yes, it’s still a coffee shop, but this small feature changed the game. I imagine it will be similar for Amazon’s endeavor into instant pickup.
A student can jump on their mobile device, place their order and pick up the supplies on the way to or from class. No searching through aisles. No waiting in line at the cash register. How convenient is that?! Amazon keeps raising the bar on the customer service it provides its members.
As impressive as this sounds, I am skeptical. By the time you’ve gone through the process of ordering you might as well have dashed out to the store, found the item yourself and bought it. If the service delivered to the home in a short time-frame, I could see more value. As it stands, this seems to make a simple process more complicated; it’s showing off with technology rather than using technology to solve genuine problems.
Instant pickup? Isn’t that called shopping or maybe using a vending machine? I don’t think Amazon has done anything special here except spend a bunch of money on nothing. But that’s just my 2 cents.
It’s amazing how much the success of various initiatives we’ve discussed here on RetailWire over the past months (years?!) hinges on accurate inventory visibility and supply chain, yet few retailers seem to be experimenting with new approaches and/or business models. As far as Amazon’s Instant Pickup service is concerned — doesn’t this seem a bit redundant? When a student needs anything, they simply go get it at the most accessible and convenient location. If Amazon had a pickup location in the student union then perhaps this matters. My guess is that they are testing and optimizing the workflow, process and acceptance before expanding the service (or not!).
Having not visited one of these installations, it sounds like a convenience store — with product selection and purchase mediated by technology (site, apps, voice).
On the surface, it may not feel like a huge leap forward in convenience. But college students experience the world through their devices and if Amazon can help them find and buy items more quickly or comfortably, this may have legs.
And if it does, it may have longer-term implications to the entire convenience channel.
Two minutes? When I was a college student, I sometimes needed my ice cream and beer in one minute. I think Amazon needs to move faster!
I actually think that this service will be great in urban corridors with young professionals and commuters. Location is still key here — if they place these lockers in the right places, a commuter who has time to shop and order on a train/bus/subway ride will appreciate and utilize something that cuts a stop out of their route on the way home.
I do think this has limited potential until food gets worked into the picture. The minute that I can pick up a dinner on my way home along with some essentials I need — I’m going to be using that locker for a lot of things.
In regard to Amazon’s two-minute pickup pilot, let’s not forget the target consumer. They are ultimate mobile natives. Many would rather text than talk. The two-minute pickup is targeted at their normal routine and how they manage most of their lifestyle.
There is another aspect to this two-minute pickup that can’t be easily replicated by stores — the incredible value of the data collected. Amazon will not only have the final choice of the items chosen for the two-minute pickup, but also all the other areas and searched. With predictive analytics this will be an incredible database to inform the customization of Amazon Go store assortments right on campus.
I partly agreed. Yet college students also, in general, are low on cash. Were this offered to high-earning, mobile young professionals I might get it. But students? At least not the ones I teach in Portland (at a school which will soon get one of these).
There are a lot of problems with this — mostly around pricing. And unless Amazon starts to charge premium pricing, they’ll take a triple hit to any chance of profit.
First, this really is simply a convenience store. And convenience stores are able to operate profitably by charging a premium for that convenience. That’s basic economics and consumers are willing to pay for the convenience. Win-win.
Second, take the expensive economics of convenience store and now hire additional staff, inventory systems, etc. to do all the pick and pack. In a convenience store, the consumer does their own pick and pack. Not here.
Third, we are … uhm … talking about college students? Money challenged, skating by …
It really doesn’t add up: Establish a premium service, offer it to those who can’t pay for it then (probably) choose not to charge effective rates for ever making profit?
The only thing I can imagine is that someone inside Amazon is carried away with that brand theory about “get them loyal early” — except Amazon doesn’t have a loyalty problem. So I don’t get this one.
I see this as an Amazon experiment to better optimize their future Amazon Go stores, which should become the Amazon model for convenience. While two-minute pickup sounds an awful lot like just normal shopping in a store, we have to remember who this service is targeted to — younger shoppers who never have their mobile device further than a finger tap away. While to many readers on this site it may seem tedious to search and find what you want in an app vs. just going to the nearest store, for the digital natives Amazon is targeting it makes perfect sense to allow them to find, select, and purchase an item through an app (or Alexa) and on their way to their destination stop by the store and immediately pick up the item without having to walk the aisles or wait in a checkout line.
This is very much in line with Amazon’s philosophy of eliminating the checkout experience completely and focusing on a check-in experience. Add to that the volumes of data Amazon will obtain from users of this service and whether or not they expand it is almost irrelevant compared to what they will learn and be able to apply to other channels.
Instant Pickup is perfectly targeted toward students (short attention span, burning need for instant gratification, little patience … ). But it goes beyond that. This means Amazon now becomes the default for all customers. When shoppers go to a retailer’s site, find the product they want and either DON’T find in-store pickup (click and collect) or the in-store pickup policy is a three-to-seven day commitment (ludicrous, but exists), then Amazon Instant Pickup becomes the default.
To retailers, this is a wake up call. Yes, Amazon is leveraging this for PR (like always). Is “instant” really necessary? No. But it is attention grabbing. Here are some tips for retailers on a related blog posted today regarding Instant Pickup.
I scrolled through all the comments so far looking for someone else feeling sad about this the mother-of-all immediate gratification. Looks like I’m the only sad one.
Sometimes our adult responses are the permanent aftershocks of our childhood. I’m a missionary’s kid born and raised in the Sahara Desert next to a leprosy village. I don’t mean to be melodramatic but it was a pretty sparse environment way back then. We’re now talking about the agony of having to wait two minutes for “essentials.” Heck, I saw kids wait two days for “essentials” too, only for them it was something to eat. When you live in that environment for the first dozen years of your life, it never quite leaves you. I think I’ve become my father talking about the Great Depression only now I actually understand it! (I still don’t quite believe the trudging to school two miles through the snow, uphill both ways, wearing socks for gloves bit.)
“Customers consistently tell us that they want items even faster,” said Ripley MacDonald, director, student programs. Oh the poor suffering things. By all means let’s make sure every demand they have is met. No need to think ahead and be prepared. No need for patience. No need for need. We are becoming a self-centered, disconnected, demanding culture … and I’m sad.
And technology is enabling all of it Ian. Good response.
Don’t underestimate the appeal to some of being able to press a button and have a product come out shortly thereafter, even if it’s a short walk. I think Amazon is just positioning itself to be the single button/app that a customer goes to for anytime/anything/right now shopping and quick gratification. Why go elsewhere?
I’m with Bob Phibbs on this one. Unless the store is really big, anyone can find an item in a minute or so. The real play here seems to be to train consumers to think of Amazon every time they want to purchase something. The longer implications of that should be really interesting for retailers and for consumers.
Consumers’ expectations are getting more demanding as retailers continue to raise the bar on customer service and speedy delivery. Amazon has been the leader in pushing the envelope on fast and convenient delivery and as soon as other retailers like Walmart and Target catch up with Amazon service levels, Amazon changes the game.
Amazon Instant Pickup is a great way to increase the loyalty of consumers that want everything immediately. While college students are a captive audience on or near a campus, the desire to have immediate access to products extends to many other demographics.
The new Instant Pickup concept is essentially the convergence of vending machines and convenience stores. It is like a vending machine on steroids. As consumers get accustomed to instant pickup services, it will force other retailers to offer similar fulfillment options. The keys to success of the instant delivery concept will be location and product assortment. The campus question is really about how quickly the college book stores react to this as they can essentially offer the same service with better access so I’m not sure this is a collegiate solution, but it certainly is for the general public and I guess it would be called a “store”!
Much broader op. This would work in any major metro area, especially the larger ones like NYC, SF, Chicago, Boston. If you’re having packages left on your porch or in a public hallway — well, Murphy’s Law. I’d say there’s going to be many, many of these before too long. Works internationally too, btw.
College students are the ultimate digital native. Everything is done on their mobile devices, Amazon’s two-minute pickup lets them use their preferred method of purchasing products with the added benefit of grabbing it on the way to class instead of waiting two days. I see this being used for needed items like phone chargers, notebooks and other class supplies, and if Amazon designs it well, impulse items like snacks will be cross sold at checkout when they choose the pick up option.
This could expand to city centers with dense office space, such as Manhattan. If they again target the younger working generation who prefer to order everything online. However I believe Prime Now will be still be seen as the more convenient option, with the order delivered to your office in two hours. I don’t see many use cases in offices where leaving to pick up your order is more convenient or needed then waiting for your order to be delivered within a couple hours.