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Scoop.it!
Amazon has 173 logistics facilities worldwide, so it might build its own logistical network — which should terrify traditional vendors like UPS and FedEx.
Farid Mheir's insight:
Amazon may replace UPS and FedEx with its own delivery service. I wrote about this in the past when I assumed that Amazon is developing grocery delivery as a volume business to put trucks on the road and cut distributions costs drastically. In that light Amazon is not looking at grocery as a profit center - all it needs is an operation that breaks even because when it does, all other deliveries will basically be free of charge. And this would mean Amazon will never open stores.
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Curated by Farid Mheir
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Jeff Bezos said during Code conference that Amazon will not get into the delivery business to replace partners - but will supplement it heavily.
I wrote before that amazon will get into the grocery food delivery business because it is the only way they can reduce their delivery costs - costs they have to give to fedex, purolator, USPS and others. So basically they will go into grocery business to break even and get free local delivery in certain key market areas.
Recently, Walmart has begun pilot tests to deliver groceries using UBER (http://www.reuters.com/article/us-wal-mart-groceries-idUSKCN0YP0H6?il=0). This sounds like a great idea, focussing on each other's strength (walmart = products & logistics, uber = delivery) with no investment to access huge volume. This option may not be as efficient as the Amazon model however but be a great solution in periods of high volume.
To see what I wrote about this, see http://www.scoop.it/t/digital-transformation-of-businesses?q=amazon+fresh
WHY THIS IS IMPORTANT
Delivery remains the biggest cost for online retailers. Between 10% to 20% of retailer costs are sunk into delivery. This remains a huge hurdle for both retailers and consumers compared to physical stores. I expect online retailer to be more and more creative on the delivery front to reduce costs and deliver faster.
Established eCommerce retailers should look for opportunities to improve delivery and newbies to never underestimate delivery as it is the CORE to make or break their online retail business. Mark my words...