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Posts Tagged ‘Amazon’

BN-BD558_patent_G_20140117133548Wayne Gretzky once said that one should skate to where the puck is going to be. Clay Christiansen used that as a hook for an HBR article and a management cliché was born. Now it seems that Amazon wants to apply that logic to shipping retail orders (Amazon Wants to Ship Your Package Before You Buy It, Wall Street Journal, Jan 17).

Amazon.com knows you so well it wants to ship your next package before you order it.

The Seattle retailer in December gained a patent for what it calls “anticipatory shipping,” a method to start delivering packages even before customers click “buy.”

The technique could cut delivery time and discourage consumers from visiting physical stores. In the patent document, Amazon says delays between ordering and receiving purchases “may dissuade customers from buying items from online merchants.”

So Amazon says it may box and ship products it expects customers in a specific area will want – based on previous orders and other factors — but haven’t yet ordered. According to the patent, the packages could wait at the shippers’ hubs or on trucks until an order arrives.

The high production value diagram above (from the patent application) shows the various moving parts to be coordinated.

There is, of course, only one question to ask about this: Is anticipatory shipping crazier than planning to deliver packages via drones? (more…)

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There have been several things written over the last couple of years about working conditions in Amazon fulfillment centers. (See, for example, here, here, and here.) Now we have a BBC report complete with hidden-camera video of what it is like inside a fulfillment center.

If you prefer to read, you can also check out “Amazon workers face ‘increased risk of mental illness’” (Nov 25).

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About a year ago, we had a post on Amazon Lockers — the Seattle firm’s attempt to solve recurring last mile problems. Customers could have their purchases delivered to a secure, nearby location. No need to sign for a package; no need to worry about someone walking off with your box. You just need to enter a code to pop open the locker that has your stuff.

But there is an obvious complication here: Those lockers have to go somewhere. Amazon’s plan was not to buy real estate but to plant them in existing retail locations. But which stores would benefit from hosting Amazon lockers? That is the question that a recent Businessweek article examines (Do Amazon’s Lockers Help Retailers? Depends on What They Sell, Sep 20).

The incentive for any business hosting an Amazon locker isn’t the monthly stipend the online retailer pays—”not even worth it,” says the manager of a Manhattan copy shop—but the lure of higher store traffic given the online retailer’s enormous sales volume and the gazillions of brown boxes sent across the nation each day.

Amazon has the lockers in nine large metro areas and touts the delivery option as a customer convenience for the many people who can’t reliably get their online purchases at work or at home. For a bricks-and-mortar business, the idea is that people coming to collect their Amazon purchases will buy other stuff on their way out the door.

So do people buy other stuff? (more…)

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How should Wal-Mart fill web orders? That seems like a straightforward question. And, given that Wal-Mart sold over $7 billion of stuff on the web last year, you would think they would have figured that out by now. Still as the Wall Street Journal tells it, the retail giant is still working through how best to fill orders (Wal-Mart’s E-Stumble With Amazon, Jun 19).

E-commerce at Wal-Mart is run as a distinct business, with its own headquarters, CEO and merchants who buy items specifically for the website. Every year, executives would start a “five-year planning exercise, but the plans were never executed and management would say the sales weren’t there to justify the investment capital,” says a former online-division executive. “Even now e-commerce is a rounding error in the U.S. market.” Wal-Mart said it expects $10 billion in online sales this year, which would amount to about 2% of its $469 billion in annual revenue.

As Wal-Mart’s online orders grew, it turned to makeshift spaces carved out of store-serving distribution centers and third-party warehouse operators to help handle the load. The extra layer added to its costs. Wal-Mart’s online shipping can cost $5 to $7 per parcel, while Amazon averages $3 to $4 per parcel, analysts say—a big difference considering some of Wal-Mart’s popular purchases are low-cost items like $10 packs of underwear.

As the quotes make clear, this is all about how to match Amazon  so Wal-Mart remains relevant as more transactions move on-line. To put the challenge in perspective, check out this graphic of Amazon’s distribution network.

MK-CE100_WALFLU_G_20130618173906

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If a major firm opened a new facility in an otherwise depressed area, that would be good news, right? An article in the Financial Times suggests that there may be some caveats on that conclusion in the modern economy (Amazon unpacked, Feb 8). The firm in question is Amazon and the location is Rugeley, Staffordshire, in the West Midlands region of England. As the article tells it, the town was once a booming coal mining center but has steadily been on the skids since the mine closed in 1990. Hence, there was much excitement when Amazon announced it was opening a fulfillment center in 2011. Amazon also brought modern management techniques to Rugeley with kaizen events and gemba walks.

How has all that played out for the workforce?

What did the people of Rugeley make of all this? For many, it has been a culture shock. “The feedback we’re getting is it’s like being in a slave camp,” said Brian Garner, the dapper chairman of the Lea Hall Miners Welfare Centre and Social Club, still a popular drinking spot. …

Others found the pressure intense. Several former workers said the handheld computers, which look like clunky scientific calculators with handles and big screens, gave them a real-time indication of whether they were running behind or ahead of their target and by how much. Managers could also send text messages to these devices to tell workers to speed up, they said. “People were constantly warned about talking to one another by the management, who were keen to eliminate any form of time-wasting,” one former worker added.

The former shop-floor manager and another worker described a strict “three strikes and release” discipline system – “release” being a euphemism for getting sacked. In the early days, people were “released” frequently and with little warning or explanation, workers said. A very large number were laid off after the first busy Christmas period, some of whom had assumed their jobs would be permanent. Chris Martin says his job lasted less than a week after he took a day off for blisters and returned to find the night shift he was on had been abruptly cancelled.

It is this job insecurity that has most disappointed Glenn Watson at the district council. “Our definition of a good employer is someone who takes on people and provides them with sustainable employment week in week out, not somebody who takes on workers one week and gets rid of them the next,” he said. The council had understood Amazon would use the first 12 months to gradually build up its own workforce, transferring agency staff on to its payroll, but by last autumn Watson thought there were still only about 200 Amazon employees, with the rest of the workers supplied by Randstad and two smaller agencies. One young man strolling out of the warehouse last September said he was still an agency worker, even though he had been there since the site opened.

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Several months ago Amazon bought Kiva, a firm that develops robotic fulfillment systems.  Several photos and tours of Amazon’s newest warehouses were released this week, and people were shocked to see that the warehouses are still built for human pickers, with no robots in sights. Bloomberg’s BusinessWeek ran an article trying to explain this observation. (Amazon’s Robotic Future: A Work in Progress)

After all, aren’t robots supposed to be the future of such places as distribution centers and warehouses? Didn’t Amazon buy a robot manufacturer, Kiva, in March? The online retailer announced in October that it was taking on 50,000 additional part-time workers for the holiday season. Shouldn’t some of those spots be taken up by mechanical arms and wheels?

The article provides several explanations:

Bruce Welty is chief executive officer of Quiet Logistics, an order-fulfillment company that manages the online inventory and distribution for retailers like Gilt, Zara, and Bonobos. He uses robots made by Kiva, the company Amazon purchased, but his warehouse in Massachusetts is not bereft of humans. “Robots aren’t very good at picking up things,” he says. “They aren’t very good at looking at a bin of different things and distinguishing one item from another.

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A brief follow up to Tuesday’s post on Amazon’s Add-on Items. Recall that was the program that keeps Amazon’s Prime customers from ordering pesky small items without compiling them into bigger orders. If Amazon is willing to limit what they will do at the low end, are they also limiting what one can do at the high end? Is there something so big and so bulky that they won’t ship it for free? According to MarketWatch, apparently the answer is “no” (The elephant in Amazon’s mail room, Nov 28).

I give you the Cannon Safe CO54 Commander Series Premium 90 Minute Fire Safe in Gloss Champagne.

  (more…)

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It’s a big week for on-line shopping so I thought I would discuss an Amazon program I stumbled across this weekend. My goal was to order a simple kitchen brush. A quick search showed that Amazon carried the product and that it was in stock. But there was a catch. Check out that little tag in the picture below stating that this is an “Add-on Item.”

So just what does that mean? Here is how Amazon explains it:

The new Add-on program allows Amazon to offer thousands of items at a low price point that would be cost-prohibitive to ship on their own. We’ve kicked off the Add-on program with thousands of new Add-on Items, and we’re adding more each day. Add-on Items ship with orders that include $25 or more of items shipped by Amazon, and you can get them delivered to your doorstep with free shipping. …

If you have an Add-on Item in your cart but less than $25 of items shipped by Amazon you can still check out with the rest of your items. When you proceed to checkout we’ll give you the choice either to keep shopping or to check out with the rest of your items and save your Add-on Items for later. We’ll keep your Add-on Items in the “Saved for Later” section of your cart so that you can easily add them to a future order.

Or to put it in a straightforward fashion: Amazon won’t sell me a kitchen brush unless I buy something else. (more…)

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Check out this graphic from a Wall Street Journal blog (Real-time Price Changes: The Story of a Dust Pan, Sep 5):

That is the price of a dustpan (specifically, Rubbermaid’s Duster-Dustpan set) on Amazon from 5:10 pm on Aug. 24th and 8:50 pm on Aug. 25. Why does it move so much? Software! A different Journal article reports that sellers on Amazon are using pricing software to relentlessly tweak their price as they jockey to be the lowest price on the web (Coming Soon: Toilet Paper Priced Like Airline Tickets, Sep 5). Here is the eye candy that goes with that article:

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One of the challenges in e-commerce has always been the last mile – that last bit of transportation required to get those new shoes or electronic gadget to the customer. Expensive packages need to be signed for and, indeed, in some neighborhoods it is best not to leave any box on the front stoop. Those are all inconveniences for the customer. From the firm’s perspective, the last mile is also where the costs get higher. The marginal cost of cramming one more box into a semi to get from a fulfillment center to a metro area is next to nothing but the marginal cost of one more stop on a delivery route  in that metro area is not.

That’s why delivery lockers make for an appealing idea. Amazon has gotten some press for developing a network of unattended delivery locations. Here is how The Economist describes it (Delivering the goods, Aug 25).

Customers and sellers should welcome the growth of a new way to ensure that goods are delivered quickly and safely. Parcels are increasingly shipped not to home addresses but to local businesses, where they are held for pick-up. This summer Amazon, an American online-retail giant, is expanding a network of delivery lockers in local shops in some of America’s biggest cities as well as in London. A locker pops open when a customer enters an access code received by e-mail or text message. Other companies are building even bigger locker networks, especially in Europe.

Some shoppers are willing to pay to avoid home deliveries. ByBox, a British firm, charges shoppers about £2 ($3.15) to retrieve a parcel from one of its 1,350 locations around the country. Other locker networks are free. Delivery firms can save lots of money by sending a batch of parcels to a single place, where delivery is guaranteed, so they are naturally keen to provide the service. Nine out of ten Germans live or work within about ten minutes of free lockers operated by Deutsche Post DHL. The French and Turkish post offices also provide free locker services.

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