Tuesday, January 12, 2016

Amazon Is Aquiring Former Local Post Offices To Develop Its Amazon Prime Services

This is indeed an information that went under the radar. I found out about it thanks to this article, discussing about Amazon's strategy. According to the article, "Amazon has been quietly buying up old and abandonned postal facilities in major and suburban markets". This is a key information for two reasons

1 It Empowers Amazon Prime Services
The goal of Amazon is to develop new categories, especially groceries, in order to multiply the frequency of purchases on its website. But there is an issue: small amount purchases are a bargain in terms of supply chain:
  • They are pricy, as the prices of the goods is relatively high compared to the cost of delivery
  • It also implies to find a solution to the "last mile", the most difficult one.
By buying such small facilities, in local area, it helps Amazon to have a more flexible supply chain.

2 Post Offices Are Struggling
Due to the lower amount of mails, post offices' business modells need to change. The operational costs are very high, which explains the reason why post offices tend to sell some of its offices. Therefore it is a clear opportunity for Amazon, as they can get the space for not much money...
Moreover, the fact to be able to have high value delivery (compared to simple mails) allow them to be more cost efficient than the postal offices. Which gives even more power to this news.

New innovative ways to deliver goods in urban cities
I also wanted to share with you a linked article I found out. It explains how a Swedish town has developped new delivery systems adapted to the complexity of "the last mile delivery" in a urban context. Those kind of tests are in my opinion more relevant than the "drone projects" of Amazon. Nevertheless, it is interesting to see how the supply chain adapts also itself to these new retail needs.

Now Amazon is still struggling to boost its presence in the grocery market, but it invests massive amounts in order to have the proper offer, the proper supply chain, in order to make a deep impact soon. For sure a trend to follow in 2016.