Commentary

On My Way or on your bike – readers react to Amazon’s crowd-delivery overture

Earlier this month, we ran a story on reports that Amazon is developing an app that will open the door to a crowd-sourced approach to parcel delivery, not dissimilar to the approach Uber has taken to taxis. We invited readers to share their thoughts on the topic… is this the start of something hugely significant, is it a hype-fuelled flash in the pan, have we seen it all before, is it doomed to fail?

Stuart Higgins, Retail Partner at LCP Consulting, thinks we’ve seen this before and that it’s already a crowded space:

Stuart Higgins 1 - Feb 14

Stuart Higgins, LCP

“This is essentially the same as the lifestyle courier model – as operated by Hermes. We’ve seen it work in the UK, where individuals make several deliveries on behalf of Hermes in their locality. The individuals receive around 50p per parcel but deliver to a schedule that suits their day, not one that is pre-determined by Hermes or the retailer.

“It would be possible for Amazon, with their scale, to make this work in the USA. However, due to the variation in the population densities across the country, it may only work initially in cities. Outside of densely populated urban areas, distances in the US are much larger, so it may not be cost effective in those conurbations.

“Home delivery is generally more sophisticated in UK than in the USA – more established, more players and more competition. Therefore it may be difficult for Amazon to compete with this model, in the UK, against Yodel/Hermes.

“UK retailers that are focused on the importance of the last mile in delivering their brand values have yet to embrace lifestyle couriers – LCP research shows that 37% of retailers report a growth in delivery related complaints in the UK year on year. A large number of these retailers attribute the rise in complaints to poor carrier service in the last mile. As a result 57% of those retailers using 3rd party carriers are planning to change their carrier partners, with 14% planning to bring the operation in house in order to ensure that their brand values are adequately serviced in the last mile. Lifestyle couriers are often cited as the worst performing segment within home delivery.

“If the retailer brand values are all about speed, then an Uber-type model may work in the UK. However, if the retailer brand values aim to deliver a broader service related proposition then the use of lifestyle couriers is a risk that Amazon or any other new entrant into the market will have to assess very carefully before committing.”

Andy Hill

Andy Hill, Electio

Andy Hill commercial director at Electio, thinks this might be a case of the UK catching up with the US and Scandinavia:

“I think this is a revealing move by Amazon and says a lot about where the industry is heading. The new service sounds like another example of peer-to-peer delivery. This isn’t a term we’ve heard much of in the UK before this year, but it has already taken off considerably in the US as well as in Scandinavia. New websites such as Nimber and Postio.uk are now operating in the UK, giving sellers the option to ship their item using an individual rather than a carrier and empowering the average consumer to become couriers themselves.

“I think this model will really take off in the next few years, and clearly Amazon does too. They’ll be an ideal resource for marketplace sellers in particular who may be selling ad-hoc items and don’t have the need to establish carrier relationships. We’ll have to see how Amazon’s model turns out, but I think it’s possible that independent sellers may still choose to use a service other than Amazon if they can.”

John Pincott, European MD, Shopatron, sees this as evidence that you have to be agile if you want to survive in this industry:

John Pincott, Shopatron

John Pincott, Shopatron

“Amazon’s expansion into the delivery space demonstrates the need for all types of retailers to adapt to changing consumer demand. In today’s multichannel, connected world, convenience is king, and shoppers want to find their products in a way that is most convenient to them. Be it via couriers, peers, or the option to click and collect in store, retailers and e-tailors alike must offer flexible delivery options to exceed the expectations of their customers.

“New cloud-based technologies have been instrumental in levelling the competitive field, by giving smaller retailers the means to optimise their inventory and provide the same, if not better, level of service than the larger players. While not all retailers have access to the same resources as Amazon, cloud-based technologies are enabling all retailers to better manage their inventory, streamline operations and maximise storefronts.

“Additionally, they have a much lower total cost of ownership, compared to typical, locally installed e-commerce applications, which has invaluable benefits for independent, smaller stores. The only businesses who are ‘doomed to fail’ are those which are not leveraging the means available to deliver exceptional, multichannel services to quickly connect customers to products, no matter where they are on their shopping journey.”

John Pal, Senior Lecturer in Retailing at Manchester Business School, thinks the devil is in the detail but that if anyone can make it work, Amazon can:

John Pal

John Pal, Manchester Business School

“The devil will really be in the detail. Issues such as non-delivery, the perennial “sorry we missed”, and damages pose more questions than answers. The likelihood of being able to co-ordinate pick-up-point, driver and destination seem tricky to say the least. However, one thing Amazon is known for is that of innovation and with the scale of the business, and flow of packages it generates, if anyone can pull it off then Amazon can.

“Life is being changed by disruptive models such as Uber, AirBnB and TaskRabbit, so a local delivery service is just another attempt to utilise surplus capacity (in this case space in a car). However, making ‘On My Way’ work, from both an operational and profitable point of view, remains to be seen. The reduction in traffic would need to be proven.

Getting to a scale that brings a profit is hard, and that is why so many small businesses go under in the early stages of their development. But scale alone is no guarantee of success in terms of long-term profitability. One only has to look to Ocado which has taken years to turn a profit. So Amazon can probably develop this business at a fairly low cost and take a chance on it not working without betting the company’s future on this one innovation. What it shows is that we have to think of Amazon as a serial technological innovator and not just, or merely, a ‘seller of stuff’.”

 

See My Way or the highway for more responses from eDelivery readers.