Amazon is is now offering customers same-day deliveries in Manhattan and this development may change the future of e-commerce business.
Amazon offers delivery in under two hours
The Wall Street Journal reported that Amazon announced on Thursday its new service, Prime Now, which promises customers same-day deliveries. To receive packages within an hour, customers of Amazon Prime would have to pay $7.99, but two-hour delivery is free. The company also indicated that more than 25,000 products are eligible for delivery under the Prime Now program, which currently costs $99 per year. The products that will be available for same-day delivery are considered “everyday items”.
Amazon tested their new service with bike messengers during the past few weeks. It is noteworthy to mention that a few months ago the company leased a building on 34th street, across from the Empire State Building, and has been using the property as a warehouse. Amazon’s bike messengers deliver items that are retrieved from this location.
Package delivery drones?
Interestingly, Forbes reported on Amazon’s experiment with drones as a high-tech delivery option. Chris Cunnane with the ARC Advisory Group, explained that bicycles and drones represent two opposite methods of delivery, a signal that Amazon is trying everything. The company may, however, encounter problems with the drones.
“While Amazon is continuing to push ahead with drone research, it is running into obstacles. The biggest are Federal Aviation Authority rules. In a letter to the FAA, Amazon warned that if the regulator does not relax its attitude towards drone regulations, the company will be forced to move all of its drone testing overseas,” wrote Cunnane, according to Forbes.
In light of disapproval from the FAA, Amazon has already started testing drones in other countries.
“Amazon is already testing drones in the UK. Additionally, sources have said in the past that India will be the launch pad for Amazon’s drone delivery service. But Amazon certainly sees potential in the US market, despite FAA regulation that make commercial use of drones illegal,” Cunnane added.
As more e-commerce businesses explore methods to deliver packages to customers and lessen delivery times, new technology, like drones, may be in the spotlight in the near future. As evidenced by Amazon’s use of the bicycle, those projects have not yet come into fruition.
A new phase of e-commerce
Same-day and one-hour deliveries have eluded e-commerce business for some time, opting instead to offer customers the option to order online and then pick up their purchases at store locations. Increasingly, however, as e-commerce companies gain market share in the overall retail industry and compete with traditional brick-and-mortar stores, same-day deliveries could represent the final tipping point. With a wealth of pictures and reviews online, and no waiting time to receive purchases, it is likely that more consumers will revert to ordering many of their everyday products online.
Some companies have had difficulty implementing faster deliveries. EBay was forced to scale back its efforts with its one-hour service called EBay Now. Similar other initiatives like Kozmo.com and Urbanfetch have also not performed well. Google offers same-day deliveries but only for a limited number of products, and the service is not offered in many U.S. cities.
Amazon is different
While other companies have not succeeded with the expedited delivery model, Amazon already has a foot in the game. Amazon Fresh, the company’s grocery delivery service, for $299 a year, also offers same-day delivery. Amazon has already built a massive delivery infrastructure, according to Wired, and Prime members are active and loyal customers who enjoy free deliveries through UPS and US mail. Additionally, other companies like Instacart, in partnership with Whole Foods grocery chain, have proven that same-day delivery can work for e-commerce businesses and the company is now valued at $2 billion noted.
E-commerce vs. brick-and-mortar
Ultimately, e-commerce is attractive to many consumers in the market because purchases can be made from anywhere at anytime. With the increasing use of mobile devices, online purchasing is expected to be steadily on the rise over coming years. The only drawback to e-commerce is that sometimes customers want to see and hold products before they purchase them. Also, waiting for packages, as a result of delayed delivery times, has deterred consumers in the past. While Amazon is working hard to address the latter issue, and may soon introduce same-day delivery to other U.S. cities, the company cannot do anything about customers who want to physically hold items before they pay. Perhaps virtual reality headsets will one day allow customers to feel like they are really inspecting items, but in reality reviews and pictures online will have to suffice. There are some things e-commerce cannot do, and brick-and-mortar stores will always have an advantage in that regard.