Earlier this month, Amazon rolled out its new Prime Now shipping service to a few zip codes in Manhattan.
If you’re a Prime subscriber and live in the serviced areas, the service promises one hour delivery of packages to Prime users for about seven dollars — alternately, you can get packages shipped in two hours for free. The service currently supports about 250,000 of the most popular items, and services only a small area.
How does the service work?
Amazon has achieved this incredible feat through a combination of impressive logistics (which we’ll go into in a moment), and limited scope. The area serviced is tiny, and it’s doubtful that, in its current form, Amazon will be able to provide it to the rest of the world, though they have some plans to expand to other areas near Amazon fulfillment centers in the next year or so. Expanding beyond that will require going a little bit further.
The road to Silicon Valley is paved with the ancient remains of startups that tried to provide same-day, ultra-fast shipping. The oldest skulls and fossilized Segways date all the way back to the original dot-com boom, when companies like the infamous Kozmo.com tried to offer one-hour shipping of thousands of items, only to run out of venture capital and collapse within a few years.
So what makes today different? What has changed?
The answer is that, over the last decade, a critical mass of necessary technologies have been growing to finally make the instant-gratification dream a reality.
Expanding this service, for Amazon and its competitors, is going to require all of this technology working in concert.
Amazon’s remarkable warehouses, which they’ve only recently started to show to the public, look surprisingly similar to the nightmare future the luddites warned us about, short only a few bleached skulls. The vast, dim warehouses full of humans toiling away amid hulking robots locked in an intricate dance of their own design — it’s enough to give even the most committed futurist a moment’s pause and a vague desire to start a rooftop garden.
It works like this: the entire warehouse is overseen by a piece of software, which has an enormous database of what items it has in its belly, and where they are. It can manipulate the world through hundreds of sixteen-inch-tall, three hundred and twenty pound robots (produced by an Amazon acquisition called Kiva Systems), which move fluidly around the facility, picking up warehouse shelves and moving them to where they’re needed. When you order an item, the robots shuffle shelves around until the nearest shelf with a copy is available, and it is then brought to the packaging center, where a human worker stuffs it in a box, tapes it over, and sends it down the chute to the truck.
This has a lot of advantages. It’s cheap, for starters. The robots are robust, mechanically simple, and can charge themselves, meaning that they requite next to no human attention to operate. On top of this, since the warehouses don’t have to be navigable to human beings, you can devote more floor space to storage, while still reducing the amount of time it takes to find and fetch an item that you need. All of this conspires to bring the total in-facility turn-around time on parcels down to only a few minutes.
As Amazon’s Vice President of Worldwide Operation, Dave Clark, put it,
“Kiva’s doing the part that’s not that complicated. It’s just moving inventory around,” Clark says. “The person is doing the complicated work, which is reaching in, identifying the right product, making sure it’s the right quality, making sure it’s good enough to be a holiday gift for somebody.”
Recently, Amazon filed a patent for software that can predict, based on previous purchases, browsing activity, and even mouse movements, what items shoppers are likely to buy in the future. This data can be used to “pre-ship” items to warehouses near the customer, in order to reduce the order-to-delivery time on products. This comes amid a massive verticalization initiative from Amazon, which is building out its network of warehouses to be larger and more geographically diverse than ever before. It’s even started doing its own shipping via its “Last Mile” service, probably in response to major holiday shipping delays last year, which may have cost the company a substantial amount of money.
According to a job posting on its website,
“Amazon is growing at a faster speed than UPS and FedEx, who are responsible for shipping the majority of our packages,” the posting reads. “At this rate Amazon cannot continue to rely solely on the solutions provided through traditional logistics providers. To do so will limit our growth, increase costs and impede innovation in delivery capabilities. […] Last Mile is the solution to this. It is a program which is going to revolutionize how shipments are delivered to millions of customers.”
All of this development paints a picture of a company intensely focused on turning inventory into data. Amazon would like the process of buying a physical product online to be as much like buying an MP3 on iTunes or a movie on Google Play as possible — you click, and your purchase arrives fast enough to set off happy, instant-gratification endorphins in your brain. As an experiment, Amazon already has a service operating in a few cities which delivers fresh groceries to your door.
The reason that Amazon wants this is that at the end of the day, the company doesn’t want to be competing with Overstock.com, Newegg, or other online retailers — the company wants to be competing with everyone. That means creating an experience that’s competitive with physical stores, which means fundamentally altering the way that shipping happens.
In the long run, all e-commerce business models converge to high-speed pizza delivery. And, if Domino’s can handle the logistics of thirty-minute pizza delivery, e-commerce companies probably can, too. It’s just a question of building up the infrastructure to make sure you have enough distribution centers in big population centers. Amazon has certainly not shied away from massive, expensive infrastructure investment in the past, so there’s some reason to hope that they may be able to pull this off. Here are the technologies becoming available that will make this service practical.
We’ve talked about autonomous vehicles here before, but generally from the perspective of moving people around. There’s a good reason for that — people are more fragile, more impatient, and generally crankier than most other kinds of cargo. Don’t take that to mean that autonomous cars aren’t big news for shipping, though! They absolutely are. Autonomous cars (and particularly electric autonomous cars) are going to be much, much less expensive (and environment-friendly) to operate than traditional mail services, both for long-distance trucking, and short-range couriers.
Right now, Amazon is relying on bike messengers for its Amazon Now service. In the future, e-commerce companies will be able to tap into an incredibly cheap autonomous shipping infrastructure, by partnering with a company like Google. If you were to outfit an autonomous vehicle fleet with mechanical luggage racks, capable of unloading themselves at their destinations, you could use the same vehicles to move cargo and people at the same time, offering massive gains in efficiency compared to maintaining separate systems.
Another option for reducing the cost of shipping is via Amazon’s experimental drone delivery program. The idea is pretty straightforward: use small unmanned aerial vehicles to deliver parcels to users on demand, taking packages directly from warehouses to peoples’ homes. A number of companies are interested in this idea, including old warhorses like UPS. This is similar to the autonomous vehicles approach, but this has a different set of trade-offs.
Notably, the navigation problem is easier (since the drones are moving through largely empty space and collisions are less dangerous). However, the drones themselves can’t carry larger items. They’ll also need to have smaller batteries than ground-based robots, which (in turn) means that their range will be limited. There are also unique regulatory issues associated with private drone use, and the FAA has not yet decided how consumer-drone applications will be regulated. Still, it seems likely that this technology will eventually be used as an integral component of high-speed parcel delivery.
The Road Ahead
The future is bright for high-speed parcel delivery. The technologies to make it happen are already available or under development, but it seems likely that all of them will be mature within a decade. In the coming decade, we may well see the beginning of the end of brick-and-mortar stores altogether, as online retailers eliminate their last value proposition. That’s going to be a major shift, and one that will likely impact almost every facet of our lives.
Are you excited for one-hour shipping? Have you tried the Amazon service? Let us know in the comments!