Amazon Takes a Big Step Toward Making Its Own Deliveries(wired.com)
wired.com
Amazon Takes a Big Step Toward Making Its Own Deliveries
http://www.wired.com/2014/09/amazon-takes-big-step-toward-competing-directly-ups/?mbid=social_twitter
61 comments
That is exactly how SmartPost (and UPS' SurePost) works. It really is magnificently expensive to do the last mile, and economies of scale really matter. The USPS has the last mile down like no other company in the country, and so for items that fit within the USPS dimensional categories, it is often less expensive for it to go through the USPS' last mile than it is to add delivery density to their own last mile.
Interesting article, thanks for that.
An anecdotal addition, but FedEx SmartPost can be incredibly annoying depending on how well the local PO works. In some instances, FedEx tracking would mark a package as "delivered" when it was just dropped it off at the local post office. When I was living in Brooklyn, this basically meant I was going to get a pink slip on my mail box within the next 3 days (even though I work from home, they NEVER rang the bell). And since, apparently, none of the local carriers were delivering packages in the neighborhood, this meant I was going to have to wait in a line of disgruntled neighbors with pink slips dangling from clenched fists for at least half an hour and often twice that.
Because of this, I would generally avoid FedEx when it was an option. I believe UPS does this as well with some category of their service, but I haven't dealt with it in my own experience.
I don't mean to say that all of USPS is broken. I'm generally impressed by the system as a whole. When I was living in Seattle, the service was superb, and now that I'm in Chicago, it's somewhere in between. I'm just saying that the service isn't necessarily consistent, and has, in the past, led me to find other options.
An anecdotal addition, but FedEx SmartPost can be incredibly annoying depending on how well the local PO works. In some instances, FedEx tracking would mark a package as "delivered" when it was just dropped it off at the local post office. When I was living in Brooklyn, this basically meant I was going to get a pink slip on my mail box within the next 3 days (even though I work from home, they NEVER rang the bell). And since, apparently, none of the local carriers were delivering packages in the neighborhood, this meant I was going to have to wait in a line of disgruntled neighbors with pink slips dangling from clenched fists for at least half an hour and often twice that.
Because of this, I would generally avoid FedEx when it was an option. I believe UPS does this as well with some category of their service, but I haven't dealt with it in my own experience.
I don't mean to say that all of USPS is broken. I'm generally impressed by the system as a whole. When I was living in Seattle, the service was superb, and now that I'm in Chicago, it's somewhere in between. I'm just saying that the service isn't necessarily consistent, and has, in the past, led me to find other options.
Brooklyn resident here, USPS itself also does that, and it's worse: They will pretend to deliver and mark the tracking status as "delivery attempted, customer not home". It has happened on numerous occasions that I have been home the entire day, and it's obvious that they never came by.
I used to live in Norway, where the exact same thing went on: Anything sent from the US via USPS would show as "delivery attempted", but it was the same thing.
So my theory is that this is code for "dumped directly at the PO".
(Here in NYC I have never once received a delivery slip from the USPS. Which is frustrating, because it means you have to remember to check the tracking status every now and then to see if you should go to the post office.)
I used to live in Norway, where the exact same thing went on: Anything sent from the US via USPS would show as "delivery attempted", but it was the same thing.
So my theory is that this is code for "dumped directly at the PO".
(Here in NYC I have never once received a delivery slip from the USPS. Which is frustrating, because it means you have to remember to check the tracking status every now and then to see if you should go to the post office.)
SmartPost is a risky proposition for online sellers like the one I work for. Feedback is important, and a couple negatives at the top of [popular review site] can hurt for a while. Looking at ours, there are some legitimate screw ups in there, but 4 out of 5 negatives are slow shipping complaints, all of which can be attributed to the local PO sitting on the package for 2-3 days before sending it out for delivery.
Agreed. Heck, I cancelled my Amazon Prime subscription because of SmartPost. I don't do that much shopping online anyway, and the free two-day shipping was consistently actually 3-5 day shipping.
So Amazon may save the USPS. Interesting!
It's pretty ironic that public representatives in Congress have been working so hard to shut down the USPS under the assumption that private business can do a better job while private business has been taking advantage of the USPS's efficiency.
It highlights the fact that some public representatives are really privately sponsored/employed (stock options in blind trust, revolving doors, flights and ).
Who do these representatives actually represent?
Who do these representatives actually represent?
They obviously don't represent workers. The USPS is one of the last big organizations where normal people can expect to have a retirement plan, even if they're disabled.
In February, 250 UPS workers walked out for 90 minutes to protest an unjust firing. UPS told them to keep coming to work, but every week they would randomly fire 20 of them until everyone was gone to give the company time to replace them. After months of campaigning against it, the workers got off with 2 weeks' suspension for what they maintain was a legal protest.
But the incident is indicative of what we might expect in a completely privatized parcel delivery industry. If the workers hadn't been unionized Teamsters, UPS would have probably gotten their way. This is the kind of working environment a lot of people in Congress are pushing for.
http://www.businessinsider.com/ups-reverses-firing-of-250-wo...
In February, 250 UPS workers walked out for 90 minutes to protest an unjust firing. UPS told them to keep coming to work, but every week they would randomly fire 20 of them until everyone was gone to give the company time to replace them. After months of campaigning against it, the workers got off with 2 weeks' suspension for what they maintain was a legal protest.
But the incident is indicative of what we might expect in a completely privatized parcel delivery industry. If the workers hadn't been unionized Teamsters, UPS would have probably gotten their way. This is the kind of working environment a lot of people in Congress are pushing for.
http://www.businessinsider.com/ups-reverses-firing-of-250-wo...
A big part of that "efficiency" is the rules required by Congress (daily mail delivery to everywhere). If it wasn't required it wouldn't be provided and that "efficiency" would go away.
Maybe parcels can save them, but it will require a lot of change because unlike the junk mail that currently keeps the lights [halfway] on, packages take up quite a bit of space. I regularly see UPS unloading more packages for a single building than would fit in a mail truck.
Maybe parcels can save them, but it will require a lot of change because unlike the junk mail that currently keeps the lights [halfway] on, packages take up quite a bit of space. I regularly see UPS unloading more packages for a single building than would fit in a mail truck.
Yes, the rules established by Congress in 1792. I don't think anyone would argue that organization has much in common with the current Congress. No organization in the world other than the USPS is forced to pre-fund pensions with $5.5 billion annually. Imagine if Amazon.com had to play by those rules.
Also, I'm not convinced by your argument that a $66 billion/year organization is going to fail because their trucks aren't big enough. The USPS actually carries a lot of packages for UPS and FedEx.
Also, I'm not convinced by your argument that a $66 billion/year organization is going to fail because their trucks aren't big enough. The USPS actually carries a lot of packages for UPS and FedEx.
Fedex also carries most of express/priority mail for USPS:
http://www.bloomberg.com/news/2013-04-23/fedex-to-fly-mail-f...
http://www.bloomberg.com/news/2013-04-23/fedex-to-fly-mail-f...
Amazon has also been partnering with USPS to offer Sunday deliveries.
It's about time. I bought something from Amazon, and had to return the first two packages that came. The first one's sealing tape (the paper one, typically advertises Fire phone) had popped because of how hard it had been dropped. The second one was torn, and in such a bad shape that when I went to a UPS location to return it as-is, they refused to accept it, even though they had delivered it in the first place! (Note: both had been delivered to an Amazon Locker, so I couldn't refuse delivery).
And then you see things like these daily: http://i.imgur.com/cYaZU4y.jpg
I have a lot more trust in USPS than UPS. Yes, there may be the occasional rogue, but in general, they have been much better. I know the local mail carrier, and it feels a lot more personal.
And then you see things like these daily: http://i.imgur.com/cYaZU4y.jpg
I have a lot more trust in USPS than UPS. Yes, there may be the occasional rogue, but in general, they have been much better. I know the local mail carrier, and it feels a lot more personal.
I have a lot of trust in USPS too, but ... I feel like USPS is a temporary or secondary measure until Amazon ramps up their own delivery service in big cities. Part of the appeal of DIY delivery is same day/next day and Sunday service, and USPS can't necessarily offer that.
In SF, Amazon already does some of the last mile deliveries, and I haven't been impressed so far. A blender chucked over a ~8 foot gate so it busted the box inside despite a ton of packaging. A package that was left _outside_ the gate - when I live right on Market Street (if you don't know local geography, it's one of the biggest streets in SF)... that was stolen before I even realized it was delivered. Bonus points because it was a birthday gift but Amazon wouldn't rush the replacement package showing up a day late. One package carefully put in front of the basement door, almost missed. Another wedged through the gaps in the gate and damaged. One time a person rang the doorbell and just dropped the box in front of the gate when they heard the buzz. Did I mention I've been home for all these packages and have no idea why people can't just ring the doorbell and wait 10 more seconds? Lastly, I have an order going to a commercial address and I'm worried they might try Sunday evening delivery instead of a saner time like 9am on Monday for all other carriers.
USPS works because the same people tend to work the same routes and end up knowing a lot about when and where to leave things - I also know the UPS guy for my address and when he's doing deliveries, it works flawlessly too. I'm worried that Amazon isn't planning for something like that.
In SF, Amazon already does some of the last mile deliveries, and I haven't been impressed so far. A blender chucked over a ~8 foot gate so it busted the box inside despite a ton of packaging. A package that was left _outside_ the gate - when I live right on Market Street (if you don't know local geography, it's one of the biggest streets in SF)... that was stolen before I even realized it was delivered. Bonus points because it was a birthday gift but Amazon wouldn't rush the replacement package showing up a day late. One package carefully put in front of the basement door, almost missed. Another wedged through the gaps in the gate and damaged. One time a person rang the doorbell and just dropped the box in front of the gate when they heard the buzz. Did I mention I've been home for all these packages and have no idea why people can't just ring the doorbell and wait 10 more seconds? Lastly, I have an order going to a commercial address and I'm worried they might try Sunday evening delivery instead of a saner time like 9am on Monday for all other carriers.
USPS works because the same people tend to work the same routes and end up knowing a lot about when and where to leave things - I also know the UPS guy for my address and when he's doing deliveries, it works flawlessly too. I'm worried that Amazon isn't planning for something like that.
> I feel like USPS is a temporary or secondary measure until Amazon ramps up their own delivery service in big cities. Part of the appeal of DIY delivery is same day/next day and Sunday service, and USPS can't necessarily offer that
I live in SF too (a block from Market), and I totally hear you.
The USPS has one thing that none of the other delivery services have: access to the insides of apartment buildings in cities like SF. At best the UPS/FedEx can ring the bell; but they can't leave the package inside. The USPS guy has keys to all buildings (the outside, not the individual apartments), and can leave the package inside. It makes a BIG difference. I don't have to drive over to the UPS warehouse to pick up a package I missed.
I live in SF too (a block from Market), and I totally hear you.
The USPS has one thing that none of the other delivery services have: access to the insides of apartment buildings in cities like SF. At best the UPS/FedEx can ring the bell; but they can't leave the package inside. The USPS guy has keys to all buildings (the outside, not the individual apartments), and can leave the package inside. It makes a BIG difference. I don't have to drive over to the UPS warehouse to pick up a package I missed.
Give it time and Amazon might start offering electronic locks to landlords free of charge so that they can do just that.
> Part of the appeal of DIY delivery is same day/next day and Sunday service, and USPS can't necessarily offer that.
This reminded me, has anyone actually had a package from Amazon delivered on Sunday by USPS?
http://www.nytimes.com/2013/11/11/business/postal-service-an...
This reminded me, has anyone actually had a package from Amazon delivered on Sunday by USPS?
http://www.nytimes.com/2013/11/11/business/postal-service-an...
Yes. My most recent purchase was delivered on a Sunday. I was surprised because I didn't know that was a thing.
Yup. From what I can tell/guess Amazon trucks things into the USPS distribution center around here.
The last Sunday delivery I had showed up on Tuesday. USPS is a joke.
UPS has had a bad reputation for a long time. I've seen it first hand and I've heard it second hand from people working in distribution centers. It was a long time ago but I will never forget the video card that arrived in a box full of water.
Interestingly, this is a problem that Indian e-commerce players tackled early on but probably due to different business dynamics. There's no dearth of courier services but none of them has the mindset of providing A-class customer experience. As a result, most of the top players handle the logistics themselves in many cities. In fact, half of their employees are associated with last mile deliveries. The result is a delightful customer experience with the top 3-4 players. Returns/exchanges are a breeze too. Time will till if it scales well while maintaining good margins.
Isn't this always the case if you have access to cheap labor?
But do they tap into the resource of dabbawala`s[1] as well? That`s one of the most sophisticated end to end delivery system i have ever seen.
http://en.wikipedia.org/wiki/Dabbawala
But do they tap into the resource of dabbawala`s[1] as well? That`s one of the most sophisticated end to end delivery system i have ever seen.
http://en.wikipedia.org/wiki/Dabbawala
That's not my point. They built the logistics to provide good customer experience despite having tonnes of traditional delivery/logistics options available. They didn't do it just because they can, they built it because they had to differentiate themselves. And dabbawalla is an entirely different entity. They have shared ownership of the food delivery network. This is not going to be the case with e-commerce logistics.
Not that I know of. The dabbawala organization sticks to their business of delivering lunchboxes and I imagine are pretty happy with doing an exemplary job of it.
A couple months ago I was contacted by Amazon recruiters, they are/were hiring heavily for a new 'logistics' operation. The recruiter would not say a whole lot except that they were working on a delivery network.
So it seems they have the physical stuff in place but now they're working out on how to do the 'last mile' as it were.
The work sounded really interesting, I did not pursue because I did not want to move to Seattle.
So it seems they have the physical stuff in place but now they're working out on how to do the 'last mile' as it were.
The work sounded really interesting, I did not pursue because I did not want to move to Seattle.
There's also office in Toronto (where I'm sitting), the Bay area, and a lot of other cities. It's a neat place.
I have a relative who works at the FedEx Ground HQ, they told me Amazon keeps hiring away their executives. Unsurprising of course, especially if you know anything about what it's like in there (typical TPS reports type hellish corporate environment). I mean I'm sure Amazon isn't all peaches and cream but they at least seem better than that.
Amazon have been doing this for a while in the UK. Opening local distribution centres and using their own van. A lot of items I buy come from there now, a suprisong amount. I bought some tassimo capsules the other week and they arrived same day, in fact they arrived 2 hours after ordering - free delivery.
USPS always just leaves a note that they will try again to deliever WHEN I WAS HOME AT THE TIME. 50% of items from USPS always gets returned to sender due to unavailable times. UPS and FEDEX seem to deliver my items 90% of the time.
that has a lot more to do with your local mailman and delivery guys than the overall organizations. The UPS guy absolutely refuses to leave packages, won't buzz my apartment, misses when I sign the sticky note saying he can leave the package, etc. I regularly have to rent a zipcar to drive to the UPS distribution center and pick up my packages.
Have you complined to ups or Amazon?
I'm dealing with this right now. I ordered a 20lbs bag of bird seed from Amazon and my postal carrier just left a note. I work from home, so I would've heard the bell. I signed the note and left it for the carrier to re deliver and leave by the door but he wouldn't take it. I finally had to tape the note to my box before it was finally taken. Of course, I still didn't get the package delivered.
I live in NYC and don't have a car. I'm not walking a mile to my local postal center to pickup the 20lbs bag. I Ordered from Amazon so that I wouldn't have to.
To their credit, Amazon overnighted a new order which thankfully got delivered by UPS instead.
I live in NYC and don't have a car. I'm not walking a mile to my local postal center to pickup the 20lbs bag. I Ordered from Amazon so that I wouldn't have to.
To their credit, Amazon overnighted a new order which thankfully got delivered by UPS instead.
It's the exact opposite for me. Depends on the individual carrier, I guess.
Yep. UPS never even tries to actually deliver to me, they just sticker and go.
USPS on the other hand, delivers every time.
USPS on the other hand, delivers every time.
I think Amazon did do a lot to help that issue last year by, frankly, giving customers a deadline by which packages won't arrive by Christmas.
It wasn't subtle either, it was in big bold letters (they might have sent out an email too) that more or less said "Order by X or it won't arrive by Christmas day."
It is both interesting and scary if Amazon moved into the delivery business. It both seems like a natural progression of their business model but also scary in the sense that it might drive one of the other delivery companies out of business and result in even more Amazon dominance.
It wasn't subtle either, it was in big bold letters (they might have sent out an email too) that more or less said "Order by X or it won't arrive by Christmas day."
It is both interesting and scary if Amazon moved into the delivery business. It both seems like a natural progression of their business model but also scary in the sense that it might drive one of the other delivery companies out of business and result in even more Amazon dominance.
Wasn't last year the year that a bunch of people ordered by the deadline posted by amazon, but still didn't get their packages in time? A friend of mine is a sales manager for UPS and I recall him having just a terrible, terrible December. They were all hands on deck for weeks, even the salespeople were out on trucks delivering packages to try and get stuff to people on time.
UPS and USPS have been all hands on Dec. for many many years. Both ramp up staff with casual employees for the holiday season. I have a buddy who drives for UPS. He typically ends his route near or after 9pm during crunch time. The overtime pay makes up for it, somewhat.
In the UK I've had packages delivered by "Amazon Logistics" before.
I'm getting Logistics more often and haven't had any problems yet. It seems to be evolving fairly quickly - they now send me emails when a delivery has been signed for which they didn't do a few months ago. I hope that one-hour delivery windows (like DPD and a few others offer) will be the next step.
I have asked a few Logistics drivers what the deal is and they seem to just be contracting with their own unbranded van, so mileage probably varies a lot.
I have asked a few Logistics drivers what the deal is and they seem to just be contracting with their own unbranded van, so mileage probably varies a lot.
I've had many bad experiences with Amazon Logistics. Amazon Logistics were the reason I learned, for the first time ever, that you can ring Amazon up and demand a refund.
It looks like they adopted the HDL/Yodel model and just robbed them of all their business. Ruthless but probably smart.
At this point I already get my stuff from Amazon fast enough, and I don't even have a prime account. I'd rather see Amazon improve working conditions for its employees (if what that I've read about that is true) than chase this obsession with feeding my desire to get more material things as fast as possible.
Ironically their focus on customer satisfaction has started to make me feel dirty about buying from Amazon.
Ironically their focus on customer satisfaction has started to make me feel dirty about buying from Amazon.
Most of the employees in their warehouses are actually contractors and not employed by Amazon, IIRC it's like 90% contractors in the warehouses.
Amazon should team up with someone like Uber X or uShip to do premium delivery services.
I'm thinking of high-dollar purchases (those that are $25k and up) where getting your package delivered by a guy in brown shorts doesn't really add to the experience. But someone in a suit and a really nice car or SUV could make the impression you want.
I'm thinking of high-dollar purchases (those that are $25k and up) where getting your package delivered by a guy in brown shorts doesn't really add to the experience. But someone in a suit and a really nice car or SUV could make the impression you want.
Team up or undercut? Amazon doesn't need to make any margin from delivery. The end game here is pretty clear. You don't go to retail stores for commodity items any more. This is bad news for Walmart, Walgreens, and CVS.
Apparel will remain safe as long as consumers buy clothing that doesn't fit perfectly.
Apparel will remain safe as long as consumers buy clothing that doesn't fit perfectly.
Apparel isn't safe when you get free shipping both ways. Or even free shipping one way. I know several women who purchase much more online and return half of it than they do in a store. One of them says going to a store is pointless, because they often don't stock plus sizes anyway, but have them online.
Maybe if she walked or cycled to the stores as regularly as she shops online then she might not need those plus sizes.
I’d like to see an analysis of how close a carrier needs to be to feasibly do the last mile delivery. How far is the typical Fedex delivery from its points-of-presence? How many POP’s does Fedex have?
How many people are within reasonable last-mile distance of an Amazon POP?
How many people are within reasonable last-mile distance of an Amazon POP?
I won't comment on Amazon for NDA reasons, but in terms of feasibility of the last mile, the answer is "it depends". Sorry to disappoint you.
The following factors can have orders-of-magnitude effects on the costs of the last mile.
* Cycle Times (the time from route start to route finish). If you offer short cycle times, you lower your delivery density (distance between deliveries).
* Market Share. The more customers you have, the higher your delivery density.
* Range. The bigger the delivery area, the further you have to travel at the beginning and ends of delivery cycles. Short cycles with large ranges can add up to very large dead weight losses.
* Street patterns. Street patterns can ease or severely inhibit efficient routing. In a town full of cul-de-sacs, you have almost no flexibility to optimize your routing. In a pure grid, you can optimize extremely well.
* Vehicle requirements. Smaller vehicles are extremely nimble, aren't subject to the same traffic considerations, and don't have problems with parking, ingress, or egress. Larger vehicles can be much more difficult to move around. This is actually a huge benefit to companies like Taobao, and pizza delivery, because they can use motorcycles effectively. Refrigerator Delivery, not so much.
And to compound that, labor and fuel costs are a multiplier for the factors mentioned.
The following factors can have orders-of-magnitude effects on the costs of the last mile.
* Cycle Times (the time from route start to route finish). If you offer short cycle times, you lower your delivery density (distance between deliveries).
* Market Share. The more customers you have, the higher your delivery density.
* Range. The bigger the delivery area, the further you have to travel at the beginning and ends of delivery cycles. Short cycles with large ranges can add up to very large dead weight losses.
* Street patterns. Street patterns can ease or severely inhibit efficient routing. In a town full of cul-de-sacs, you have almost no flexibility to optimize your routing. In a pure grid, you can optimize extremely well.
* Vehicle requirements. Smaller vehicles are extremely nimble, aren't subject to the same traffic considerations, and don't have problems with parking, ingress, or egress. Larger vehicles can be much more difficult to move around. This is actually a huge benefit to companies like Taobao, and pizza delivery, because they can use motorcycles effectively. Refrigerator Delivery, not so much.
And to compound that, labor and fuel costs are a multiplier for the factors mentioned.
What about deploying parcel lockers ? is it just not perceived as comfortable enough by people ? or the economics aren't that good ?
It depends on how close together your customers are.
Let's say a driver makes $15/hour working an 8 hour shift, and Amazon's driver salary budget is $0.50 per parcel. Over the course of an 8 hour shift you need to deliver 240 parcels.
You can do that by making a delivery every 2 minutes, starting right at the depot - or by driving 2 hours, making a delivery every 1 minute for 4 hours, then driving 2 hours back to the depot. Or by driving 3 hours, making a delivery every 30 seconds for 2 hours, and driving 3 hours back.
Let's say a driver makes $15/hour working an 8 hour shift, and Amazon's driver salary budget is $0.50 per parcel. Over the course of an 8 hour shift you need to deliver 240 parcels.
You can do that by making a delivery every 2 minutes, starting right at the depot - or by driving 2 hours, making a delivery every 1 minute for 4 hours, then driving 2 hours back to the depot. Or by driving 3 hours, making a delivery every 30 seconds for 2 hours, and driving 3 hours back.
The average UPS driver is 120 deliveries per day.
http://www.wired.com/2013/06/ups-astronomical-math/
My mailman said he does something like 250 houses + a medical office complex. I expect getting up to the scale/density of UPS or USPS is going to be quite difficult.
My mailman said he does something like 250 houses + a medical office complex. I expect getting up to the scale/density of UPS or USPS is going to be quite difficult.
Seems like it would be moderately easy to take off a nice chunk by first rolling out Amazon Direct Delivery (or whatever) to large buildings in urban areas. You can probably fill a truck between a couple condo and office towers.
They knew exactly for each city, zip code how many folks has order each week, each Christmas season.
When the cross over point reach for their own profitability, they just turn on the switch for that part of the system.
Nice!
When the cross over point reach for their own profitability, they just turn on the switch for that part of the system.
Nice!
This has been brewing for years. Amazon controls a ton of the rest of their processes, and with Amazon Fresh experiments and the huge logistical network it is inevitable.
http://multichannelmerchant.com/opsandfulfillment/warehouse/...
tl;dr: They move packages from their distribution centers to one of these "sortation centers" (they may be co-located, it's hard to tell from either article). From the sortation center they truck packages directly to the USPS distribution center (DDU) closest to the customer, and then the USPS carries the package on the last leg to the customer. This means they bypass UPS/FedEx/DHL/OnStar in favor of USPS's much cheaper non-express rates because it sounds like once a package is at the DDU it will be in the customer's hands same or next day.
Edit: I believe this is how FedEx SmartPost works as well. FedEx does the merchant -> DDU leg and then USPS takes it the rest of the way.