Will Amazon Deliver a Revolution in Shipping?
The “it takes money to make money” concept is well received at Amazon (NASDAQ:AMZN). The world’s largest online retailer is no stranger to spending big bucks in order to improve its customer reach and products. Amazon is already a highly desired online destination for consumers, but its latest venture seeks to eliminate many of the advantages that can be found at a traditional brick-and-mortar store.
With technology becoming an increasing role in our daily lives, people are demanding instant gratification more than ever. At Amazon, the shopping experience has been changed by allowing customers to shop from a seemingly endless supply of inventory at their fingertips, at all hours of the day. The downside to the process has been shipping, but this is slowly changing. Amazon is reportedly planning to speed up delivery times by expanding its network of distribution centers, which may allow the retailer to offer same-day delivery to more shoppers. This would help narrow the instant gratification gap that consumers may enjoy by shopping at brick-and-mortar stores such as Walmart (NYSE:WMT) or Best Buy (NYSE:BBY). Taking the concept one step further, Amazon is also offering more ways to receive a purchase.
Amazon has been quietly rolling out a locker system in order to solve the problem of failed deliveries and make receiving a package more convenient. Amazon Locker is a new and easy way to receive small online orders from the retailer. They are self-service pick-up stations located around neighborhoods in places such as grocery stores. Once a package is available at the Amazon Locker, the consumer receives an e-mail notification with a pass code and can pick-up the item at a time that works best for them. The package will be available for pick-up for three days from the date of delivery. If the package is not picked up within the reservation window, it will be returned to Amazon for a full refund. The locker system aims to eliminate the worry of missing a delivery or having it stolen.
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“The home-delivery challenge has always been an issue for e-commerce in Europe and Japan, and is growing in the U.S., especially as thieves have moved into the game,” explained Fiona Dias, chief strategy officer for ShopRunner, which facilitates two-day delivery at about 60 retailers, according to WSJ. “It’s easy to follow a UPS (NYSE:UPS) truck around and steal packages from doorsteps.” Currently, Amazon Locker is located in Seattle, New York, the Washington, DC area and London. However, the company states it is adding new locations every week. Recently, it opened several locker locations across San Francisco at 7-Eleven outlets.
Amazon is not alone in their quest to solve the instant gratification gap in the e-commerce world. EBay (NASDAQ:EBAY) has reportedly launched a pilot test of same-day shipping in San Francisco. Customers willing to pay $5 an order and purchase items from local stores can enjoy the quicker shipping method. Investor’s Business Daily reports, “Some tech analysts blogged and tweeted over the weekend about invitations sent to San Francisco users to try a new same-day shipping service called eBay Now. Analysts say the San Jose, Calif.-based payments and e-commerce company appears to be gauging customer reaction before deciding to roll out same-day deliveries in other parts of the U.S.” Participating stores include Macy’s (NYSE:M) and Target (NYSE:TGT).
While Amazon and eBay are still early in the shipping revolution process, anything that makes buying online easier and more secure is likely to be well-received by consumers and provides a potential catalyst for shareholders. As long time Wall St. Cheat Sheet readers know, a ‘Catalyst for a Stock’s Movement’ is the ‘C’ in our CHEAT SHEET investing framework. So far, investors appear to be pleased with both companies. Year-to-date, shares of Amazon have jumped 37 percent, while eBay has surged 50 percent.
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