Amazon: Lead On!

I am a proud Amazon Prime member. Each day, the bell rings at my apartment in Philadelphia, and it is another package from Amazon. I now proudly fill my grocery basket from Amazon. Last night, it was white vinegar and paper towels. And the night before, it was cookie mix and hot sauce.

I don’t like going to the grocery store. At my home in Philadelphia, it is inconvenient. I don’t have a car, and the pantry items are tough to carry through city streets. At my home in WV, I find that I can get the mix of products from Amazon that I cannot get from my local Kroger or Walmart. <I am angry at Walmart and hate to go there. There is no question in my mind why it was rated as the worst shopping experience by USA Today.>

Whenever I need something, I just click it on my mobile Amazon application and voila, my pantries are filled. There is no need to stand in line. The variety is extensive and Amazon is also expanding to refrigerated items. I had no issues with the last shipment of Fage yogurt or Del Monte Citrus Salad. Both of these refrigerated shipments arrived with no issues. Amazon’s vision does not stop with refrigerated. Their goal is perishable items and frozen goods.

So, what did I think when Amazon announced last Thursday that the Company was going to “own its last mile of delivery” and compete with UPS? I applauded. “ándale, ándale,” I said. I love supply chain innovation. While other retailers struggle, Amazon marches on. I think that this is a brilliant move. Here are my thoughts:

• Transportation Costs Are Only Going to Go Up. On Thursday, Amazon reported another quarter of skimpy profit even as sales increased 23% to $19.74 billion. Shipping costs rose 31%.The company reported a first-quarter profit of $108 million, compared with $82 million a year earlier. With the scale of Amazon, and the lack of reliability of UPS, this opens up new doors for the company to control costs.
• Amazon Now Has the Scale. To be a last-mile shipper, a company needs scale. Clearly, in major metropolitan cities, Amazon has it. The city populations will continue to grow and Amazon can reduce delivery times, improve costs, and offer new services to inner-city residences. The key is population density. There will not be the same scale in the less populated areas like my lovely farm in West Virginia. This is where Amazon’s partnership with the good old-fashioned U.S. Post Office makes sense.
• New Services. Customer-Centric Supply Chains. Amazon’s vision is wide. The control of the last mile will allow the company to ship frozen goods, meats, fresh vegetables, and items that UPS does not accept. It will also enable the building of new services like TV installation, blind installs, and disposal of old electronics. I find this to be extremely exciting.
• Shorter Times for Delivery. Trucks Rolling around-the-clock. The ownership of the last mile by Amazon will shorten the delivery by at least a day. And it will make evening deliveries more feasible. Scheduled deliveries become a possibility. With the evolution of manless trucks and drones, no doubt about it, Amazon will continue to innovate. They have the scale. Their focus is long-term. And for this old gal, who is tired of standing in lines quibbling with loyalty programs and coupons, I say bring it on! Life is too short to push a grocery cart.
• Source of New Insights. Every consumer goods manufacturer should look to this move by Amazon as a new opportunity. Imagine the opportunity to match customer attributes to product attributes and ship the same day to your customer. My mind is jazzed by the clock speed of new demand insights: the ability to get to know who your customers are and what they are doing with your products. It is increasing and the data richness is exciting. We have new opportunities to bundle products for special occasions, study basket purchase behaviors, and provide new levels of excitement for customers through digital path-to-purchase and health-and-wellness programs. In this time of slowing growth, partnering with Amazon offers a wealth of opportunities.

Amazon, I applaud you for being a supply chain innovator. In the 1990s, when I purchased books from you, and I heard your leaders speak of their future vision, I was a doubting Thomas. Today I say, "Bring it ON!" Own your trucks. Power your shipments. Cut out the middleman. They are standing in your way to deliver on your vision.