World domination…not from Facebook or Apple…but Amazon

Another warning shot to the big box players – Best Buy and Target – Amazon is looking to provide same day delivery! Yikes. Companies like Best Buy are already feeling the pinch from the combination of smart phones and Amazon. Consumers love to “showroom” basically visit stores to look at products and try them out and then…poof either use their smart phone right there or go home to a internet ready device to order the product at Amazon. Take advantage of lower prices and delay the instant gratification of having the product delivered. The instant gratification part is that was a saving grace for a Best Buy – really want a new XBox, order it and wait a few days or buy it at Best Buy and start your Madden season that afternoon. Could this change? Yes.

According to reports, Amazon is exploring how they can start to offer same day delivery. Yikes. I am sure that is exactly what embattled retailers like Best Buy want to hear. Of course this will be a logistics challenge for Amazon. They will need to position inventory close to populated areas and have the appropriate amount and mix. They will need to create new partnerships with the likes of FedEx and the USPS to have access to the transportation – mostly small parcel distribution. Add to this the need to understand how to replenish the distribution centers themselves. Gives one a head ache just thinking about it!

Maybe there is another solution…what if Amazon partnered with the likes of Best Buy, Barnes and Nobles, Target and the like. Amazon would provide the same day deliver service while the retailers would act as the warehouses. Amazon could charge customers a premium for same day delivery as well as take a percentage of the sale of product. The retailers would get the other percentage of the receipts and be responsible for holding the inventory. Mom and Pop retailers could eventually join in with Amazon…using the eCommerce giant to provide same day delivery, to that specific region.

Brick and mortar retailers would see an increase of merchandise velocity, Amazon would avoid having to build and maintain distribution centers as well as penetrate markets at a faster pace.

Amazon could keep this to a select number of vendors – figure out who can fulfill the majority of the product needs.

I am not sure what Bezos’ appetite is to work with the likes of Best Buy and Target, but at some point he has to be gunning for WalMart. Partnering with other enemies of WalMart might make sense in the near term. The enemy of my enemy….

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Filed under Current Events, Supply Chain

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