Amazon Lockers: When Urban Dwellers Find Home Delivery Really InconvenientWritten by Frank Hayes and Evan Schuman
Amazon has been expanding its network of Amazon Lockers—relatively secure holding areas for Amazon packages in the middle of stores—in the U.S. since last year. They were initially limited to New York, Seattle and Washington, D.C., and inside chains including Rite-Aid and 7-Eleven. The concept has been picking up considerable traction in the U.K., though. And one key reason is that package delivery is more problematic there.
An interesting report from Kantar Retail detailed some of the problems: “In the U.K., home delivery is basically the very antithesis of convenience, as it routinely ends up with a frustrating wait in for errant delivery personnel or an equally galling queue on a Saturday morning at the local Royal Mail sorting office. While the former might have the silver lining of a day spent watching The Jeremy Kyle Show or Cash in the Attic, the latter is devoid of any consolation whatsoever. With increasing numbers of workplaces becoming rather reluctant for their post rooms to basically serve as last-mile fulfillment centers for Amazon and other distance sellers, the onus is falling on Amazon et. al. to come up with an alternative.”
The home-delivery problem for E-Commerce is hardly only a British issue; it is an apartment and city issue. But the fact is that a huge percentage of the E-Commerce decision-makers in this country do not live in apartments or urban areas. A relatively small percentage may work there; however, packages delivered to these E-Commerce execs’ homes typically find themselves to a front door. These execs may work in the city, but they don’t—in general—live there.
So it’s easy to see why the locker idea has appeal, especially in high-density urban areas where owning a car is optional and many young apartment dwellers are good E-Commerce candidates. The customers have a safe, relatively convenient place to pick up their Amazon purchases; the brick-and-mortar stores get a little more foot traffic.
Although Amazon might once have worried that lockers in the U.S. would represent “nexus”—a physical presence that would expose the E-tail giant to sales-tax liability—that’s less of a concern since Amazon began cutting deals right and left with state tax authorities and lobbying for online sales taxes.
But there’s still a deep irony here: Customers have to go into a brick-and-mortar store to pick up their Amazon purchases. Remember, these are customers who went online to avoid buying in-store. It’s exactly not the direction you’d expect Amazon to want its customers to go.
Still, if this Amazon version of site-to-store doesn’t seem to make strategic sense, that’s just pure-play E-tail theory colliding with reality. Amazon started as a pure middleman, taking orders that someone else shipped to customers. Then it began keeping some inventory of its own on hand, adding distribution centers spread across the country (and the world) to cut shipping times and costs, and finally switching sides on sales taxes.
And if embedding its delivery system inside other chains’ stores is its paradoxical way to keep some customers happy—even if, as with Rite-Aid, it’s a direct competitor—don’t expect Amazon to think too hard about that problem. The E-tailer can always make sense of it later.