The Download: Technology is driving Amazon delivery times to near zero
Technology continues to make it possible to optimize every aspect of business, meaning that “zero” as a business goal — zero excess capacity, zero waste, zero errors — is now theoretically possible. Just think of how the rise of the sharing economy has led to the success of the zero marginal cost business model. And now Amazon could be on the cusp of introducing another zero into our business lexicon: zero delivery time. As in, the time required to get a product from store to consumer is being whittled down to zero.
Amazon’s latest attempt to reach zero delivery time could be a drive-through grocery store for Silicon Valley’s tech workers. As first reported by Silicon Valley Business Journal, Amazon users would pick up their grocery items in a physical store after first ordering online and scheduling a pickup time at a nearby facility.
From plans presented to Silicon Valley developers and planners, it appears that the facility will include a combined 11,600-square-foot building and grocery pickup area. Although there’s still some debate about whether this is going to happen (and Amazon itself has not confirmed the rumor), it’s the type of innovation that shows why the concept of zero delivery time is so powerful.
The idea of a drive-through grocery store is in the same vein as some of Amazon’s other inspired retail concepts, such as using drones to drop off packages on doorsteps across America. That idea for Amazon Prime Air sounded a bit daft when it first appeared at the end of 2013, but now the Federal Aviation Administration is increasingly on board with drone deliveries, and a whole lobbying movement is forming around commercial drones. The NASA Ames Research Center recently held a three-day event to discuss just exactly how drone deliveries might happen in the future.
You can see where Amazon is going with these ideas — it’s all part of a broader retail strategy of getting packages to consumers faster than ever before. Before the Amazon drones concept, there was Amazon one-hour delivery. In cities such as New York and London, Amazon Prime Now makes it possible to receive 60-minute delivery on thousands of popular products.
The problem is the last mile. To get packages to consumers as fast as possible, you need huge warehouses close to customers. You need the logistical firepower to get these packages to consumers wherever they live. In the case of one-hour delivery in Manhattan, think of massive staging areas in the five boroughs of New York City or across the water in New Jersey, with a fleet of trucks ready to race over bridges or through tunnels.
That’s where drones come into the picture — they might be more efficient than trucks, planes or automobiles in traversing hard-to-reach destinations or avoiding traffic gridlock. Also needed: a way to shorten the distance between warehouse and consumer to eliminate the risks of logistical snarls. That’s where the physical drive-through grocery story plays a role: the consumer comes to the product rather than the product coming to the consumer.
But if you’re truly going to get to zero delivery time, you’ve got to go even further than that. You have to make it possible for customers to have access to products on demand. What if large retailers such as Amazon begin to 3-D print products on demand for consumers, literally letting consumers have access to products the moment they want to order them?
Yes, Amazon appears to have thought of that as well. In 2014, the company patented a method of 3-D manufacturing on demand. Orders placed by customers would be transmitted to Amazon data centers, which would relay those orders — as well as the digital files for printing those products — to a fleet of mobile trucks equipped with 3-D printers. As trucks made their way to delivery points, they would be simultaneously 3-D printing products on the go.
Just about the only way delivery could be made faster, in fact, is if Amazon knew your order before you placed it.
According to one concept for which it received a patent in 2013, Amazon was thinking of ways to predict consumer purchases and send them on the way before they had even been ordered. By analyzing abandoned shopping carts or the contents of wish lists, for example, there might be a way to construct an algorithm that could sense and predict when customers in a certain geographic region might be on the cusp of buying specific items. Amazon called it “anticipatory shipping.”
Now, contrast zero delivery time with zero margins. Critics could argue that’s where the retail world is headed if behemoths such as Amazon have their way. They accuse Amazon of constantly slicing and dicing its prices in order to drive competitors out of business. The faster that prices drop, though, the faster margins head to zero. If you’re as big as Amazon you can just make it up on volume. Everyone else goes out of business.
That appears to be the retail strategy of the next rumored Amazon-killer: Jet.com, which is primarily going after Amazon based on price and turning the Internet into a giant Costco. Once you sign up as a Jet.com member and pay a $49 annual membership fee, you get access to what Jet.com promises will be the best prices on the Internet. Depending on how many items you’ve loaded up into your shopping basket, the prices keep getting lower and lower.
So do gross profit margins.
The Amazon drive-through grocery store concept is just like the Amazon drones concept — it may or may not go anywhere, but it points to a future of retail innovation in which zero delivery time is closer and closer to reality.
Dominic Basulto is a futurist and blogger based in New York City and a regular contributor to the Washington Post. The Washington Post is owned by Amazon Chief Executive Jeff Bezos.