From SCDigest's On-Target E-Magazine
- June 30, 2015 -
Supply Chain News: Amazon Said to be Considering Building Uber-Like Service to Deliver Packages
Amazon "On My Way" Concept would Use Regular People to Deliver the Goods Using Mobile App; Can Anyone Match UPS-FedEx Low Costs Per Package?
SCDigest Editorial Staff
The Wall Street Journal reported last week that Amazon.com is considering a plan in which it will launch a service based on a mobile application that would have regular people picking up packages and delivering them to customers, similar to the way Uber, Lyft and other companies are now providing tax services.
SCDigest Says: |
 |
| While consumers might happily pay Uber say $20.00 for a ride that might cost double that in a taxi, they won't pay $20.00 to have a package delivered. |
|
What Do You Say?
|
|
|
|
In 2011, new rules for large trucks were set for models built in 2014 through 2018, so this is the second round of changes under the Obama administration.
In 2013, reports emerged that Walmart was considering a somewhat similar idea. Under that concept, Walmart shoppers who wanted to be part of the program would tell Walmart where they live. The stores would use mapping technology to see whether there were on-line orders needing delivery that are on or near a given customer's route back home.
Walmart would offer a discount on the customers' in-store bill, effectively covering the cost of any extra gas burned and a little more in return for the delivery of the goods.
"This is at the brain-storming stage, but it's possible in a year or two," Jeff McAllister, then senior vice president of Walmart US innovations, told Reuters at the time. (See Multi-Channel Fulfillment Wars Continue on, as Walmart Makes a Lot of News.)
There has been no news on the possible Walmart program ever since that time.
Now, Amazon has the idea of enlisting brick-and-mortar retailers in urban areas to store the Amazon packages for some form of fee. A pool of drivers using their own vehicles would be alerted to the delivery needs and pick-up one or more packages and take them to customer residences, in a program Amazon is calling "On My Way."
When Amazon might pilot such a program is unknown.
This "crowdsourcing" approach for package delivery is not new. Uber itself is already offering such a service in a few markets. There are others joining the game as well, such as Roadie, Deliv Inc., Instacart, Google and others.
The challenge for all these companies will be basic economics. While consumers might happily pay Uber say $20.00 for a ride that might cost double that in a taxi, they won't pay $20.00 to have a package delivered. And the current cost advantage of UPS and FedEx in terms of delivery "density" will be hard for any company to match, even in urban environments. UPS' marginal cost to deliver the next package can be as low as just $1.50, for example, and it's hard to see Amazon, Uber or anyone coming close to matching that.
(Distribution/Materials Handling Story Continues Below
)
|
