From Amazon Prime To Amazon Pronto, The Future Of Physical Delivery

Been meaning to write more about specific pieces of Amazon, a company I believe is best-positioned to be the next Apple-like stock in blue chip technology stocks. Below is a fun, short piece on how Amazon may think about short-term delivery models for their physical goods, which I posted on TC last week.


“Membership has its privileges.” A slogan made famous by American Express today also applies to an online membership many, many people happily keep: Amazon Prime. Ever since committing to Prime — and this is anecdotal — but our household trips to Target steadily decreased, and in 2013, outside of one trip to replace a defective item in a pinch, I haven’t shopped for household goods in any mega-store. With Prime, Amazon pulled off one of the most elegant consumer segmentations, encouraging members to fill their carts with a few clicks or taps from any device and training customers to continuously ask the following question at the time of purchase: “Do I need this item before 48 hours?”

Now, what if the answer is “yes”?

Amazon, of course, offers next-day shipping, so they’ve compressed the 48 hours to 24. This is where Amazon will fight one of their many future battles — delivery warfare and special ops to put Amazon goods in our hands and houses in a variety of old school and new age ways. Here’s how I suspect Amazon to carve up these first critical 24 hours of delivery — and I’d love to hear from you below what other methods you believe Amazon may use:

Delivery By The Hour: Like many SF-based startups are offering now, Amazon will likely follow suit. Order something from them and need it in an hour, or within two hours, or within four hours, or by the end of the day? Amazon will probably segment each delivery window and append a price for that convenience, and the ease of tapping items, checking out, and setting a delivery zone and time window will probably be easier than the solutions we hack together today. (It’s a stretch, but one could make the case that Amazon has already started this segmentation with its option to “subscribe and save” for oft-purchased household goods.)

Delivery At Fixed Locations: This is all about Amazon Lockers. For customers that travel often, keep odd hours, don’t have a doorman or secure area for packages to rest or don’t want them delivered to work, Lockers turn into Amazon-specific post-office boxes. In turn, Lockers will likely save Amazon shipping fees and provide physical touch points with customers who may increasingly come into contact with the Amazon brand. This could be important, because….

Retail Warehouses: Now that Amazon has physical locations in more states (like California) because of changes to interstate online sales taxes, it sounds a bit crazy but I wouldn’t be surprised if Amazon follows through on the rumors to open Costco-like experience stores in select locations and put their own spin on what a live Amazon shopping experience could be.

Aerial Delivery: One can’t write a post about the future of delivery options and not touch on unmanned aerial drones. Drones are in the news today for all sorts of reasons, but I’m talking about commercial applications. I’m writing this post on a Sunday morning on my little deck outside, which is a perfect landing spot for a modest drone aircraft to periodically land and drop-off the only item on Amazon that I actually “subscribe” to. Given the operational prowess of Amazon, I actually expect this to be in Amazon’s future.

In September 2012, I wrote a post here about Amazon that briefly touched on many aspects of their remarkably diverse business lines. The scale and pace of Amazon is staggering, and reading this epic post by a16z’s Jeff Jordan on the collision course Amazon and Google are on drives home the point. Given Jordan’s experience as President of OpenTable and PayPal, and now a board member at Airbnb and Pinterest, he likely sees the future of e-commerce better than most. For startups interesting in the opportunities created by this battlefield, look at companies starting out in the delivery space, fixed-location storage (BufferBox was quickly acquired by Google), drone hardware and software companies, new technologies to help make sure all these types of operations run efficiently, and new technologies and designs that can help reinvent the in-store retail shopping experience. In conflict, there is great opportunity.