Amazon takes multi-pronged approach to owning the last mile
Forget drones for home deliveries of online orders. That was the consensus of a variety of industry experts I spoke with at the recent NRF Big Show in New York. Many however do see opportunities for direct-to-consumer sellers to use alternative service options outside of FedEx and UPS, as well as technologies such as autonomous vehicles and delivery robots to conquer the challenges of the last mile.
A few, not surprisingly, said to look to Amazon.com as the leading indicator for where the industry is headed. A couple of breaking stories in recent days may provide some insight.
The e-tail giant, according to a Wall Street Journal report, is trying to undercut FedEx and UPS in an attempt to attract more third-party sellers to its Amazon Shipping service. Specifically, Amazon is offering to pick up orders from merchants’ warehouses and deliver them directly to the homes of consumers without tacking on additional fees for peak periods during the holidays or on weekends. Nor will Amazon add fuel surcharges to protect margins as FedEx and UPS do.
John Haber, CEO of Spend Management Experts, said fees tacked on by the two parcel delivery services can add up to 30 percent more to shipping costs.
Amazon Scout – YouTube
Last summer, Amazon introduced its Delivery Service Partner program, which recruits entrepreneurs to start and run their own companies to deliver orders placed on its site. At the time, Amazon claimed that owners, who it would help with financing, technology and training, could earn up to $300,000 in annual profit operating a fleet of up to 40 delivery vehicles.
In other Amazon news, the company announced that it is running a pilot to test the use of autonomous sidewalk robot technology for making deliveries to customers’ homes. The test in a neighborhood in Snohomish County, WA will start with six Amazon Scout robots. The devices, which are about the size of a small cooler, will be used to complete deliveries to customers in the test area.
Initially, Amazon plans to have employees walk with the robots to make deliveries during weekday daylight hours. Amazon, which developed the technology in-house, said the robots have been designed to safely and efficiently navigate around pets, pedestrians and anything else in their path.
Amazon, in some ways, is late to this game. The e-tailer’s pilot joins a growing list of retailers and restaurants testing sidewalk robots for making deliveries in neighborhoods, on college campuses and other locations.
- Amazon’s Pitch to Woo Shippers: Fewer Fees Than FedEx, UPS – The Wall Street Journal
- Amazon calls on entrepreneurs to help deliver its packages – RetailWire
- Amazon Scout – YouTube
- Meet Scout – The Amazon Blog
- Amazon tests delivery robots in Snohomish County – The Seattle Times
- Will PepsiCo’s robots replace the pizza delivery guy on college campuses? – RetailWire
DISCUSSION QUESTIONS: How do you see the battle between Amazon and the major carriers for last mile deliveries shaking out over the next several years? Which of the autonomous technology now being tested is most likely to succeed?