Amazon Unveils One-Hour Delivery Service

http://www.wsj.com/articles/amazon-com-launches-superfast-delivery-in-nyc-1418903192?mod=e2tw

by spew • 12 years ago

288 157 12 years ago

redgrange• 12 years ago

nine days ago: https://news.ycombinator.com/item?id=8720898

jtchang• 12 years ago

I'm pretty sure the logistics of 1 hour delivery can get pretty insane. However what I am really looking forward to is real time delivery anywhere.

And how about returns? Can I return stuff in one hour too?

ovi256• 12 years ago

What do you mean by real time delivery ? Instant delivery ? Real time delivery tracking ?

For Amazon Prime users, I could very well see returns piggybacking on deliveries - the delivery courier would simply pick up the return.

ComputerGuru• 12 years ago

Why would you want to? You can get the replacement or alternative products, and every front to boot, and then mail it back within 30 days.

jcr• 12 years ago

Just as Amazon is trying to use 1 hour delivery to compete better against brick-and-mortar companies, Google is trying to help the brick-and-mortar companies compete with Amazon by providing a competing delivery service called "Google Express" (previously called "Google Shopping Express") [1]. It's been mentioned a few times on hn [2,3].

[1] https://www.google.com/shopping/express/

[2] https://news.ycombinator.com/item?id=8037108

[3] https://news.ycombinator.com/item?id=8452337

jmathai2• 12 years ago

Google is trying to help the brick-and-mortar companies compete with Amazon

I'm not sure that wording is accurate. Google is leveraging the brick-and-mortar companies to compete with Amazon and collect more data about its users. Arguably some of the most valuable data they could get; spending and buying habits.

I doubt Target is thrilled that Google is looking to inject themselves as a middleman between them and their customers. Target has historically leveraged customer buying habits pretty aggressively [1]. I'd be surprised if their execs aren't frantically trying to figure out how to keep Google from "helping" them compete with Amazon.

[1] http://www.forbes.com/sites/kashmirhill/2012/02/16/how-targe...

free2rhyme2142• 12 years ago

Exactly. Google isn't trying to help anyone but themselves, that's business 101. Just like Instacart is helping themselves by leveraging Whole Food's inability to delivery groceries to customers.

notatoad• 12 years ago

It'll be pretty easy for target to prevent google from helping them, they can just decline to participate in the program. They are participants though, which should tell you something about how target actually feels about the program. And they don't lose any customer habit data, as customers still use their loyalty cards through Google Express.

Almost all of Google's profit right now is derived from B2B relationships. Providing services to other businesses is what they do. Yes, they make a good profit while they're doing it, but to suggest the business who are google's customers don't see any benefit from it is silly.

shalbert2• 12 years ago

How can they get to places within an hour and make a worthwhile margin of profit?

cshenoy• 12 years ago

They're charging $7.99 for one-hour delivery. That's about on-par with on-demand courier fees that I've seen in NYC. Presumably the two-hour free delivery will be phased out once they've reached some metric.

discodave• 12 years ago

If we assume that a) the 1h delivery is break even for them and 2) the 2h delivery would allow the courier to do a couple of extra deliveries on the same trip, then I think the per item cost for 2h delivery could be only a couple of dollars, making it competitive with UPS and thus maybe free for prime members indefinitely.

smackfu3• 12 years ago

$7.99 + you need to have $99 Prime.

bengali3• 12 years ago

make a worthwhile margin of profit?

If Dominos can do it for pizzas, amazon can do it for much bigger ticket items.

PLUS they are not incurring the cost of shipping the item to a prime member. Right now for every physical good prime purchase they spend money on shipping.

Also see: Amazon is not worried about short term profit [1]

They have probably planned to not profit for a while in exchange for increased cashflow. Again for Amazon, profit isn't first, the customer is.

[1] http://www.businessinsider.com/amazons-jeff-bezos-on-profits...

saosebastiao• 12 years ago

Dominos can do it for Pizzas because the profit margin on Pizzas is about as close to 100% as you can get, and delivery-person pay is about as low as you can get, combined with subsidy via tips. A $20 pizza will have a higher total gross margin than a $100 anything-retail.

Amazon is going to lose money on this, and it will probably only ever be feasible (even as a net loss) in a handful of zip codes in the US.

mrfusion• 12 years ago

Wouldn't four hours or anything same day be just as good? Why not save some costs there?

smackfu3• 12 years ago

I think most purchases break down into "I need it now" vs. "I need it in a day or two." Currently, Amazon can't get the first category, so it's served by local stores. And four-hour or same-day delivery doesn't really address that market either.

function_seven• 12 years ago

Actaully, I often need something "before tomorrow". Unless I wait until 9PM to realize that, a four-hour delivery time would be perfect for me.

driverdan2• 12 years ago

They already have this service, Amazon Fresh.

quackware• 12 years ago

Unfortunately only in the 10001 zip code.

tgcordell2• 12 years ago

They will be rolling out to additional zip codes as quickly as they can

tgcordell2• 12 years ago

They've just enabled 10001, 10010, 10016, 10017, 10018, 10019, 10020, 10022, 10036

smackfu3• 12 years ago

I'm more impressed that the two-hour delivery is free.

bring1• 12 years ago

so ordering in the rushhour times is the xpert play here then.

avnfish• 12 years ago

Surely customers will be able to choose 1 or 2 hour delivery before they make their purchase?

oh_sigh• 12 years ago

Free + a socially mandated tip.

Dirlewanger• 12 years ago

Can't wait to see how awesome the work environment will be for these couriers! Probably much like Uber's drivers: under constant pressure to meet a quota (in this case, probably minimizing the number of missed 1 hour marks), and if you're injured/hit/cause an accident, it's on you and the employer will be nowhere to be found.

gfodor• 12 years ago

And like uber drivers, one day you will wake up and find your job replaced by a robot.

Shivetya• 12 years ago

or blocked by a politician who is merely showing concern for oppressed workers, small business, and of course for the children

digikata2• 12 years ago

More like Amazon's warehouse workers with constant countdown clocks, except on the open road. Which sounds like a potential hazard for other drivers.

driverdan2• 12 years ago

If they don't like it they can quit.

Nacraile• 12 years ago

We tech folk would do well to remember that relatively few people have the good fortune of working in a labour market where demand outstrips supply. Being able to just quit with a comfortable buffer in the savings account and confidence that a better option is just around the corner is a rare privilege.

In a market where there is an oversupply of labour, a free-market race to the bottom results in significant suffering over a large number of workers while benefitting a small number of the already-wealthy. It is difficult to view this as a socially desirable outcome.

philwelch5• 12 years ago

Ever ordered a pizza? 1 hour delivery doesn't come close to any kind of realistic safety margin.

digikata2• 12 years ago

That depends: is the average distance between Amazon warehouses and recipients higher than the distance between a neighborhood pizza shop and it's customers?

marban• 12 years ago

Are they outsourcing the couriers in this case? The promo video looks like as if these guys are sourced straight from a Chrome Industries / Rapha commercial.

nateberkopec• 12 years ago

This headline could've read: "Amazon relaunches Webvan".

Very interesting how ideas from the first bubble re: brick-and-mortar are coming back.

lotharbot• 12 years ago

Webvan wasn't the first ever grocery delivery service. Their failure doesn't make in non-viable, it just means they didn't do it in a viable way.

I still see the dairy truck and the Schwan's truck in my neighborhood from time to time. They're not exactly the same thing, but they've proven long-term sustainability for some parts of the market. I also see home delivery trucks for King Soopers (Kroger) and Wal*Mart in my area.

mooreds3• 12 years ago

It's hard for me to see how this doesn't hurt local vendors badly. Of course, it depends on what the the 25,000 items are, but that was one of the key differentiators between Amazon and local stores--if you needed something and you needed it now, the local store was the only option (things like cabling for a new TV, gifts for a party that night, etc).

Now, for prime members in NYC at least, Amazon is a viable option.

What other moats do local stores have? Amazon wins on:

   * selection
   * cost
   * convenience
   * reputation
   * knowledge (this depends on the local store)

What does the local store win on?

   * feel good factor (supporting local business and employment)
   * hold the item in your hand (not sure there is one word for it in English, but the Germans probably have one)

It's a draw on

   * I need it now

Interesting times, indeed.

gdulli• 12 years ago

Honestly, I like getting out of the house and going to the store. Not every day, I do my share of buying online. But there are plenty of times I'd rather go out and I'm not tempted to sit around and wait to be brought something, even if it could come within the hour.

I often do reverse show-rooming. I'll browse through a real bookstore, which is fun, but I'll look up reviews on mobile and factor that into my buying decisions.

hnnewguy2• 12 years ago

I'll browse through a real bookstore, which is fun, but I'll look up reviews on mobile and factor that into my buying decisions.

This is my use-case. For my small corner of the world, Amazon has been a boon to used-book stores (even regional chains), as it is now easier to see what I'm buying.

ics2• 12 years ago

It's a draw on cost too, as Prime prices are sometimes inflated beyond other stores or even the regular retail price.

As for convenience, those without a doorman always think twice before placing orders online.

icebraining• 12 years ago

As for convenience, those without a doorman always think twice before placing orders online.

I think that's one of the major gains of cheap/free fast delivery. It's easier to order if you know you'll get it during the next hour or two when you'll be at home, instead of "tomorrow".

dkrich2• 12 years ago

What does the local store win on?

I think in the long-run, it'll be price.

Sure, in the short-term, Amazon can do what they do and undercut on price, but in the modern age, Wal-Mart has pretty much figured out the optimal model of inventory storage/distribution and the model of keeping inventory on-hand and having customers come to them enables them to do this at an incredibly large scale and at razor-thin margins. Yet they are still margins.

As we have seen before, delivering products at that scale and selection via delivery is extraordinarily challenging to do profitably. Amazon can do a lot of things, but one thing I don't think they will ever be able to do is bring products to peoples' doors at a cheaper price than Wal-Mart can store inventory in large stores and distribute to customers who come to them. There are just too many complexities around the delivery/customer service/quality control processes to make the economics work out.

tesseractive3• 12 years ago

Another big difference between this and Wal-Mart is geography. Wal-Mart's strongest areas are less-densely-populated rural areas where one store can draw customers from miles around. And indeed -- you can't easily set up a same-day Amazon delivery service in rural America. The distances and low population density make it completely impractical. For the foreseeable future, Amazon will compete with Wal-Mart in these areas using traditional UPS-style delivery and larger selection.

But this is going into New York City. And the flipside is that you can't put a Wal-Mart in the middle of NYC -- it's cost prohibitive. So it's not clear that this initiative even competes with Wal-Mart really. And brick and mortar stores in the middle of an expensive city have huge real estate costs, so it's difficult (though not necessarily impossible) for them to compete on cost the way Wal-Mart does.

philwelch5• 12 years ago

Wal-Mart has the downside that you have to go to Wal-Mart though. I don't just mean that in the dismissive sense that their stores are unpleasant (which they are), but there's a fundamental mismatch between an urbanizing population and a big box store in the suburbs that everyone has to drive to and lose their car in a massive parking lot.

In fact, Sam Walton knew this. His mission wasn't to dominate the world of retail, it was to bring the same economies of scale urban retail already had to rural communities.

Keep in mind that physical storefronts have costs too. Wal-Mart has warehouses too, and they're probably simpler, but when all you have is warehouses, there's a lot of complexity you can add and still have a simpler, more cost-effective model than employing battalions of people to operate cash registers and stock shelves in thousands of small towns and suburbs across the country.

eru2• 12 years ago

Sure, in the short-term, Amazon can do what they do and undercut on price, but in the modern age, Wal-Mart has pretty much figured out the optimal model of inventory storage/distribution and the model of keeping inventory on-hand and having customers come to them enables them to do this at an incredibly large scale and at razor-thin margins. Yet they are still margins.

That only works because people don't value their time it takes to get to Wal-Mart and shop there.

JoshTriplett• 12 years ago

Walmart hardly counts as a "local" store. (For that matter, they also sell online.) And between Walmart and Amazon, I'd much rather do business with Amazon.

Actual "local" stores seem highly unlikely to win on price.

I suspect that Amazon and others will solve the "showroom" problem in the not too distant future, for the handful of products where that actually matters.

Other than brand loyalty, I don't see any obvious niche that a local store could do better.

tesseractive3• 12 years ago

It's in no way clear that Amazon wins on selection. In 25K SKUs, Amazon will have electronics, but almost certainly hace fewer SKUs than a dedicated electronics store. They will have groceries, but not as many as a grocery store. They will have clothing and housewares, but surely only a small sampling relative to Macy's.

I shop at Amazon Fresh in Seattle sometimes, and the selection is significantly trimmed relative to pretty much any local grocery store I can walk into. The tradeoff is the convenience of not having to go to the store and spend my time traversing the aisles.

mrtron• 12 years ago

They are starting with 25k SKUs. They have the potential to have infinite SKUs in this program, while brick and mortar stores are limited to shelf space.

That being said, it might make sense to keep the selection artificially small for multiple reasons.

darkmighty• 12 years ago

I'd dispute both cost and knowledge.

If a store is close to your commute route, for example, the delivery costs will probably never be low enough to match with that.

I would also dispute on knowledge. In this case, knowledge is a matter of time: you can always google exactly the product you need, but that's going to cost you time. If you're not sure about the exact specifications of what you need, reading reviews isn't necessarily going to help either. Salespeople, if available, can tell you what you need and what's the best cost-benefit (probably leaning towards the more costly).

There's an additional aspect you didn't account for: entertainment. I don't get entertainment off of shopping, but i know a lot of people do. You get some of that while looking things online, i.e. 'browsing' items, but it's not the same experience. Also, shopping is often tied to other entertainment like eating out, movies, etc -- this is done strategically for mutual benefit of mall venues -- and of course can't be replicated online.

It's easy to imagine even if the whole catalog of Amazon were available today for 1-hour delivery for $7.99 (or less), a big part of the average urban dwellers' shopping would still be done offline.

55556242• 12 years ago

If a store is close to your commute route, for example, the delivery costs will probably never be low enough to match with that.

I think it's not if it is "close," but if it's "convenient" to your commute route -- in terms of location and/or commuting method. If I am in NYC and I need to get off the subway, walk a half block, get the item, and then walk back and get not he subway; I might not want to do it, depending on the item. If I'm somewhere where I'm driving my commute, I might not think twice of driving five minutes out of my way and I can pick up almost anything. If I'm riding my bike to commute, I might easily be able to stop, but I might not be able to carry it.

mooreds3• 12 years ago

Good catch on entertainment (and people watching). I'm not much for that, but my SO is.

As for knowledge, I think that it is a mixed bag--I've been in stores where the staff outclassed most anything I could find on the internet, and others where, let's just be charitable and say that the staff was lacking.

Tiktaalik• 12 years ago

I was thinking recently that at this point, I'd only feel comfortable opening up a retail business if a significant part of the business was oriented toward short notice purchases, as that would be somewhat protected from Amazon and other online retailers.

With this development that "short notice" protection doesn't seem so concrete.

yellowstuff• 12 years ago

You missed customer service, a huge one for me. I actively try to avoid brick and mortar shopping ever since a hardware store owner refused to take back a defective stud finder. Amazon will bend over backwards to make things right for a customer, and accepts returns for any reason.

beachstartup• 12 years ago

for what it's worth, this is why i use my amex for every in-store purchase i make.

x0x0• 12 years ago

There's other places amazon is very vulnerable.

For example, try buying a car fob battery -- in my case, a cr2016. You'll see dozens of such batteries, some name brand, some not. But if you read the comments, you'll find that even the purportedly (from the listing name and image) name brand batteries often aren't. eg [1] After spending 30 minutes trying to find a single listing that actually would send me a bloody name-brand, within expiration date battery, I just gave up. This was far more hassle than just going to my local hardware store.

Another place amazon is very vulnerable is personal / body goods and food. I'm fine buying books and flashlights from them, but for food, deodorant, sunblock, lipsticks, etc, I want real goods not fake ones. Ideally purchased by amazon directly from the originating company. Instead, I'm confident that when you purchase those goods, even if directly from amazon and not one of the marketplace vendors, amazon will look to find the closest warehouse with such an item in it (even listed from one of the marketplace vendors) and send that to you. Amazon also makes it quite difficult to just purchase directly from amazon and not from a marketplace vendor. I think there's going to be a huge scandal when people realize lots of those goods are fake.

[1] http://www.amazon.com/Energizer-CR2016-Lithium-Battery-5-Pk/...

LLWM• 12 years ago

If the local vendors get hurt by this, it means they were providing an inferior service, and we're better off replacing them with Amazon.

pwenzel• 12 years ago

Don't forget the time you spend commuting to said brick-and-mortar store. Who wants to waste 45 minutes driving to and from Target, only to wait in line listening to screaming kids? There are only so many hours in a day.

I'll do my best to support my neighborhood hardware store, but I'll definitely delegate many purchases to Amazon Prime delivery if it means saving a trip to Target, Best Buy, or other big box store.

whiskyant• 12 years ago

The local stores I visit are almost never mom & pop shops anyways, but huge franchises like Home Depot, Walgreens, Safeway, or Target. So the feel good factor is non-existent.

peteretep• 12 years ago

If a Mom and Pop store can't differentiate, why would it be good for them to stay in business?

The ones that provide something extra will raise their prices and be more expensive, and people will go when they're willing to pay the difference; look at the independent book shops in London as an example.

It's a romantic idea and all, but beyond that I don't think "local vendors are de facto a good thing" is a reasonable starting point.

cauterized2• 12 years ago

Local vendors keep the money circulating around the local community in the form of wages, rent, and profits. So yes, they're good for a community.

free2rhyme2142• 12 years ago

What most don't realize is that Amazon is taking on Fedex, UPS, and the USPS by doing it themselves for profit. This is actually very smart if you can solve the logistics problem long term because this model can be leveraged in many other cities.

Instacartlove• 12 years ago

Having the ability to pickup and deliver from multiple locations throughout a city like Postmates or Instacart does is a huge advantage. At least for a one hour delivery. Density of drivers in a city is an important factor as well. If you can route a driver to a location nearby instead of a single warehouse you can be more efficient. Instacart and Postmates also both have high frequency categories that they can use to leverage less frequent items, e.g essentials over time and potentially at lower costs.

morgante• 12 years ago

I just placed an order with this new service (some HDMI cables for our office).

The selection is pretty decent, definitely comparable to Google Shopping Express.

One very odd note though: they ask for a variable tip to the delivery courier (something Google doesn't do). So even for "free" 2 hour delivery, you're paying for delivery. While I see how this is better for the courier, I think it's a big mistake—people hate navigating the social dilemma of how to tip properly, and solving social dilemmas is a key advantage of digital services.

Chevalier2• 12 years ago

Agreed on all counts. At least build the tip into the cost, like the ride-sharing services do.

I'd vastly prefer doing away with tips altogether and just paying a living wage, but the least these services can do is to spare me extra work.

walterbell3• 12 years ago

For personal deliveries, tip with cash, set online tip to zero.

For corporate deliveries, tip online according to corporate policy, no personal decision needed.

stronglikedan3• 12 years ago

There's a pizza chain that does this for online orders, and it drives me crazy. I don't tip until after service is rendered, because tipping ahead of time insures nothing. There's no place to put a custom note on the order either, so I have to order by phone. It's good for them that they have great pizza, because I'm sure this turns off a lot of potential customers, but not me.

wlesieutre2• 12 years ago

I suspect that when I tip online for pizza it automatically gets bumped to the lowest priority of all of the driver's deliveries. He already has my money, and prioritizing all of the cash-tip orders over mine gives more potential for earning tips.

Of course, my sample size is too small to say anything conclusive. After it felt like I was noticing a pattern a couple of times I just switched back to tipping cash.

ssharp2• 12 years ago

I don't like the automatic tips for another reason: I'm always skeptical the delivery person actually gets the tip.

Avshalom• 12 years ago

Tipping ahead of time ensures that driver gets paid. Which is a bit more important than whether you're first or last during a delivery run.

SiVal3• 12 years ago

Tipping is a nuisance, something that goes in the "Con" category in a Pro & Con analysis. The vendor is implicitly warning you that you shouldn't count on getting good service included just because you officially paid for it. They're warning you that they have no real control over their service providers, and "it would be a shame if something unforeseeable, like getting caught in traffic, were to happen to a delivery you were counting on", so you'd better work something out with them privately and hope the "service" provider is pleased with the result.

Like many people, I have a lot of options when it comes to who I buy from. I now have to pay sales tax to Amazon, and there are often other vendors who are cheaper, or charge no sales tax, or have stores five minutes away where "shipping" is instantaneous and always free for even the smallest purchase. Even so, I'll often pay more and buy from Amazon anyway because of their service. Anything that reduced their service quality would shift some of those purchases away from Amazon.

I haven't seen this new Amazon system for myself yet, so maybe there's no real problem, but if "free" 2-hour delivery turns out to require air-quotes around the "free" along with a nudge, nudge, wink, wink, "it would be a mistake to disappoint me" attitude from the delivery guy, I'll use the system a lot less.

sokoloff• 12 years ago

The equivalent cost of shipping from a brick-n-mortar store that's five minutes away is almost surely more than 15 minutes of your time (could easily be 30 minutes) and, if you drive, $2-4 at the IRS/GSA rates.

For me, avoiding that 15-20 minutes of annoyance is well-worth calculating and paying a tip. (Agree that that's a negative, but it's relatively small negative.)

ssharp2• 12 years ago

The stores don't charge sales tax. The state mandates that they collect sales tax. If the state doesn't mandate that the store collect sales tax, the store won't "make" you pay it, though I think technically in most states, you're still supposed to file those purchases with your state income tax and pay then.

lolwutf• 12 years ago

I certainly hope you don't carry that attitude with you throughout life. Tip your bartenders and pizza delivery guys... they make nothing, anyway. (And, if you're in tech, chances are an extra $2 for a tip is NOT going to break your budget.)

Rygu• 12 years ago

Just heard about Shyp yesterday. Seems like it's the same idea but selling the concept of regular people helping each other for a more personal service (like Uber, Lyft). I kind of like that approach. http://www.shyp.com/heroes

BrandonY• 12 years ago

Somewhere, Kozmo.com CEO Joseph Park is reminding someone that this is Jeff Bezos's second attempt at one hour delivery, and that he was already doing this for Bezos back in the 20th century.

mooreds3• 12 years ago

He's actually at Forever 21, so I assume he's reminding them: https://www.linkedin.com/pub/joseph-park/3/710/a3b

comrade1• 12 years ago

Time to order KY lubricant and the Sports Illustrated swimsuit edition delivered to a bathroom stall at SFO...

(if you don't remember Kozmo, this was done by a reporter during the last dotcom boom/bust as a joke)

guelo• 12 years ago

What I don't understand about the big retailers is why they haven't been doing something similar all along to compete with Amazon.

Amazon has been building warehouses all across the country near cities to reduce shipping times. But the retailers already have what amounts to hundreds of warehouses at every population center, plus the inventory management systems. Why haven't they put their inventories online and offered same day delivery to neutralize Amazon?

mynameishere• 12 years ago

No kidding. The pizza delivery model would seem a no-brainer. You simply have a few employees who know where everything in the store is (and can probably fetch anything 10 times faster than a normal customer) and then batch them out to drivers. It seems like Walmart could service 100 million people this way (with their entire inventory) just like Domino's et al have been for decades.

It's so obvious that I'm guessing they've done the math and it doesn't work.

serge2k• 12 years ago

Amazon has their entire infrastructure focused on rapid delivery of small amounts of stuff to a customer.

Big retailers are focused on maintaining optimum levels of inventory at their big box stores all over the country.

It's a different problem.

curiously• 12 years ago

Meanwhile in Canada...

zipfle• 12 years ago

I find it really weird that on HN, which in general I find to be a pro-capitalist, let-the-market-sort-it-out kind of place, so many commenters seem irked at businesses 'being cheap' by offloading waitstaff salaries onto tips. I'm just a simple country hyperchicken, but isn't this that 'maximizing shareholder value' stuff I've been hearing so much about?

olalonde• 12 years ago

First, "maximising shareholder value" is essentially a government regulation which many would argue is not "capitalistic" in the classic sense.

Second, one can both support capitalism as a system and dislike some business practices.

Third, there is no guarantee that offloading salaries onto tips will result in maximising shareholder value since it could result in less customers using the service.

benatkin• 12 years ago

Amazon could just have OnTrac create a product called One-Hour Delivery, and have OnTrac claim that they tried to deliver but that the recipients weren't home.

tapatio• 12 years ago

I'm guessing this is not good for https://www.instacart.com?

Amazon Unveils One-Hour Delivery Service

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