Are Amazon soon to take their same day delivery options global?
By Dan Boaz
Speculation that Amazon is looking to ramp up their same day delivery services not just in the USA but internationally ratcheted up to a higher level this week. Research and news reports from outlets such as CNET and Business Insider both point to a recruitment drive seeking same day delivery experts being conducted by the giant online retailer.
The company's job listings show openings abound for same day delivery specialists including product and marketing managers, the consensus of opinion is that Amazon is both looking to expand their US same day capactity in addition to accelerating growth of the service option in overseas market. As we've considered before on the Same Day Delivery blog it would seem that not every US urban market lends itself well to same day delivery for consumer purchasing in quite the same manner as B2B same day delivery. Amazon's pricing of $5.99 per order for same day shipping doesn't appear to be viable in every market which is much of the reason that at present the service is only offered in a dozen cities.
It will be interesting to see if 2015 perhaps brings a tiered approach to same day delivery pricing from Amazon based on radius from a distribution center. The capacity to deliver and order 20, 30 or 50 miles on the same day would not be a major obstacle but the pricing doesn't appear to make sense from a logistics standpoint. Currently the flat fee applies for orders placed by noon and guarantees delivery by 9pm the same day. Expanding the total number of customers served by adding a form of tiered same day pricing might be a bold but successful approach.
Additional suggestions are asking exactly which merchant services Amazon may be intending to migrate to include the same day delivery platform. At present millions of products from hundreds of thousands of retailers are sold via the site by third party merchants in Amazon marketplace. Sellers are able to transfer their warehousing and delivery options to Amazon by registering for fulfillment by Amazon and moving inventory to Amazon's own distribution centers, adding these sellers to the same day delivery platform would naturally expand the service but require additional expansion it would seem.
These third party sellers pay fees to Amazon for each sale on product type and constitute some 40 percent of all Amazon sales at present. From a distance it certainly appears that pricing for same day delivery might be Amazon's stumbling block with shoppers and that increasing total sales is the primary objective without resulting in a situation where the delivery model is leading to financial losses. Whether $5.99 per item can work in markets beyond those currently served remains to be seen but I think we're going to see much of the experimentation by Amazon take place in Europe next year.
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