Monday, February 3, 2014

Amazon's Last Mile Problem (Hint - It's not Amazon)

Amazon recently announced that it is considering a significant increase in annual subscription price for Amazon Prime. Amazon Prime, for those who live under a rock, gives its subscribers free 2-day shipping on almost all Amazon purchases. This price increase will net Amazon significant revenue. However, it is fair to assume that this will increase pressure on Amazon to deliver on its promise of 2 day deliver - something observers claim doesn't always happen today.

This brings me to what I see as Amazon's major challenge - the last mile of their delivery chain which is when the goods meet the shopper. Of the 2 occasions I've been disappointed by Amazon wasn't Amazon's fault.

On the first occasion, I wanted a package rerouted after it had made its way to the local fulfillment center. I called Amazon's customer service requesting a re-routing of my package. However, after 10-15 minutes of phone conversation with Amazon (in which time they basically told me nothing more than what I looked up by tracking my FedEx package), they simply referred me to Fedex saying they are unable to change delivery. I called FedEx, and as I expected, FedEx simply said my request was simply pointless.

On the second occassion, I ordered a pair of running shoes. I put 25-30 miles on my shoes every week, and few things give me as much joy. I was looking forward to getting my hands on Mizuno's Wave Rider 16 (that is one good looking pair of shoes!) like a little kid waiting for Christmas. I ordered them to be delivered at my office since it pretty much guaranteed that I would be there to receive it. I waited till 8:30p on Friday, only to receive a notification from FedEx that no one was available to receive the package. I was thoroughly disappointed.

What is interesting about the two events was that Amazon wasn't to blame, it was FedEx. Yet, all my disappointment was directed towards Amazon.

As a shopper, I want my goods faster & cheaper than ever before. Jeff Bezos gets it. I am certain that Bezos gets the sheer joy shoppers get from getting their hands on things they want, and I am certain he doesn't like being vulnerable to courier delivery services that culturally not as in tune with the customer as Amazon is, nor are they as motivated to improve as Amazon is.

How Amazon addresses these challenges will be interesting to watch, especially in light on increased subscription for Prime. I will continue to pay... for now.