Archive for January, 2008

Amazon Wants to Get Up Close and Personal With You

January 25, 2008

Its a sing-song refrain.

To be the best in retail, you’ve got to “get close to your customers.” You have to know who they are; what they like; what they eat, breathe, and sleep.

But now Amazon is trying to take that concept a whole lot farther.

Amazon is trying to get as physically close to their customers as possible, rolling out same-day delivery service on their website in 6 Northeastern U.S. markets.

The service allows Amazon.com customers in select metro areas to choose “Same-Day Delivery” for certain items purchased on the site, as long as they are purchased before 8:00am on weekdays (purchases after 8:00am are delivered by the following evening).

The service is reportedly doing very well, even without the weight of Amazon’s marketing engine behind it, and the internet giant has plans to add the service in a number of new markets this year.

The truly ironic thing about the service, however, is that when it comes to being close to your customers, Amazon has traditionally been the furthest thing from it.

Not in the sense that Amazon doesnt know anything about their customers (we know that’s not true — after all, they can tell you with certainty that 87% of the folks who bought that George Forman Grill you’re coveting also purchased a Freddy Mercury action figure), but more in the sense that they’ve always been geographically far away from their customers. Without real-world shops or stores, Amazon.com serves products out of their own warehouses or partners’ distribution centers, which are typically hundreds if not thousands of miles from the people who are making the purchases.

With that fact in mind, it’s impressive that Amazon has developed a process to get their wares to customers’ doors in any timeframe shorter than a fortnight, let alone less than 12 hours.

So if Amazon — without any local stores — can find a way to get a product delivered to you the same day you buy it, the big question is, why haven’t major retailers — with hundreds of local stores in North America alone — found a way to do the same?

In theory, with a quiver full of local stores at their disposal, retailers could potentially get products to their customers much, much faster than Amazon. With storefronts in the neighborhood of virtually every household in a major U.S. market, it’s practical to imagine that retail customers could get products delivered to them in just a few hours, as opposed to the 12 or so that Amazon requires.

The explanation for why this hasn’t happened yet is complex. But we can isolate 2 main reasons why this service is taking so long to come to market:

a) lack of inventory control
b) lack of a local delivery mechanism

The first problem — lack of inventory control — naturally makes local shopping difficult. If you don’t know what products you have on the shelf, how can you sell them to customers? This has been a problem for as long as retail has existed. You should be able to recall with ease the last time you searched a store high and low for a certain item, only to have a clerk look up the product on a store computer and exclaim “the system SAYS we have 5 in stock!?”

But over the past 5 years or so, the accuracy of store inventory accounting has improved dramatically. The sweeping popularity of “In-Store Pickup” (the shipping method for online purchases where you can choose to pick items up at your local store for free) has forced retailers to step up their ability to predict which items are in stock so they can offer this service. This option has grown in popularity to the point where some retailers report that 50% of their items purchased online are “shipped” using this method.

But just knowing what you have on the shelves doesn’t solve problem #2: how to get those items delivered from the store to the customer.

Local delivery isn’t as easy as it sounds. FedEx, UPS, and DHL aren’t designed to do on-demand deliveries from stores. The items customers purchase online are shipped almost exclusively from far-away distribution centers, from which products are funneled by the major carriers through a sophisticated network of central and regional shipping hubs — a process honed over decades of operation — before reaching the customer.

With the fastest, most expensive shipping online option available (“Express” or “Next-Day”), that process usually takes 2 days at a minimum — 1 to locate and pack the item, and 1 to ship — or 4 days at a maximum if the order is placed over a weekend, when traditional carriers do not operate.

That’s where LicketyShip steps in. LicketyShip has designed a turnkey software and logistics solution that integrates smoothly with retailers’ legacy online platforms and store protocols to provide an efficient method for delivering products direct from local stores at affordable rates.

In other words — when retailers use LicketyShip, they have an easy way to get products delivered from their brick-and-mortar stores to their customers the same day they buy.

Getting your products closer to buyers means faster delivery; faster delivery means happier buyers.

And that’s how you get closer to your customers.