Features, Strategy & Operations

Amazon Brings It to You

Amazon is continually finding ways to better implement Bezos’ “last mile” (the most costly and often the slowest delivery distance from final distribution point to one’s home or pick-up location) more efficiently and expediently. Secondly, through data analytics and machine learning, they are able to deliver products to consumers before they even know they need them. My over-used example is of a friend arriving home after work to discover a package on his porch from Amazon with a light bulb in it. Scratching his head because he didn’t order it, he’s in his living room an hour later when a light bulb went out in his kitchen.

Now Amazon’s third iteration on preemptive distribution is emerging out of its 2016 Seattle experiment with what they call the “Treasure Truck.” On the basis of its apparent success, they plan to expand it nationally. Essentially, the truck goes through targeted neighborhoods, typically carrying large quantities of one heavily discounted trendy item, like GoPro cameras for a 64 percent discount. Other products have ranged from Harry Potter books, video games, Echo devices and even Beast Mode hats promoting ex-Seahawks’ Marshawn Lynch’s Beast Mode apparel store in Seattle, complete with Marshawn signing autographed hats. They have treasure trucked candy, Ben & Jerry’s ice cream, Thanksgiving turkeys, Porterhouse steaks and Lay’s potato chips.

The process works by buying online through treasure truck special offers through personal notifications, and then picking up the purchases from the truck. I guess the process would be called BOPIT. Ha! Ha! The online marketing for Treasure Truck is lively, irreverent and entertaining, unlike the catalog personality of the rest of Amazon.

Seriously, these trucks can become mobile physical stores without having to pay rent or own real estate. What an ingenious distribution platform, particularly for Amazon. Once again, it makes use of their superb data mining capabilities to determine consumer preferences down to specific areas within any city. It’s another distribution platform for discounting excess inventory like GoPro, promoting new products and for building personal relationships.

Another recently launched distribution platform, which is their version of the click-and-collect advantage realized by legacy retailers, is what they are calling “Instant Pickup.” Initially being rolled out across college campuses, the program allows customers to purchase hundreds of items including drinks and snacks on the Amazon app, and then to pick the products up in as little as two minutes later at Amazon lockers.

House Calls

A less whimsical iteration of preemptive distribution is a process that will “out geek” Best Buy’s 15 year-old Geek Squad, which physically installs and repairs Best Buy products and had been a major competitive advantage over Amazon — until now.

According to Recode, Amazon is hiring an “army of in-house gadget experts” who will travel to customers’ homes to conduct free Alexa consultations, and for a fee, will install products as requested. Essentially the focus is on setting up a “smart home” system (domestic IoT), connecting heating and lighting systems and any other appliances made to be integrated and controlled by apps, and increasingly by voice. Thus, Alexa, Amazon’s virtual assistant built into its Echo line of gadgets (which is selling like hot cakes), became one of the catalysts driving Amazon’s decision to establish an educational process, both in-home and online.

Another catalyst was the fact that smart home gadgets are one of the fastest growing electronics segments, but also the least understood and most difficult to set up and integrate. This challenge led to higher than normal return rates. So it made good financial sense, as well as a smart strategy for personalizing their customer relationships.

According to Recode, Amazon charges $99 for an installation service like setting up an Ecobee4 Alexa-enabled smart thermostat. Multi-device set-ups that take more than an hour may cost more. On the other hand, Amazon offers 45 minute “Alexa Smart Home Consultations” for free. And while the experts are answering questions, they can also nudge customers to consider a personalized shopping list, based on the house call.

Currently, the house call service is only available in Seattle, Portland, San Francisco, San Diego, Los Angeles, San Jose and Orange County California. When we researched job listings, expansion plans appear to be in Tampa, Hoboken, Miami, Orlando, Houston, Dallas and Las Vegas.

Interestingly, the Best Buy “Geeks” still have the advantage of “first mover” with this personalized service. They also have the advantage of physical stores, and recently announced free Google Home and Alexa demos and tutorials in 700 of their roughly 1000 stores.

Once again I want to emphasize this personal service advantage to my legacy retail readers. Best Buy turned itself around and can now compete with Amazon on a more level playing field in the electronics sector because they created a personalized destination experience — a reason for consumers to want to go to their stores. Operating on all possible distribution platforms is the future. And the future is now.

Amazon Gets the Distribution Century

Amazon’s recent moves to open bookstores, their acquisition of Whole Foods, the Amazon Go experiment, the Treasure Truck and “go-to-home” personalized service send the message that Amazon totally understands distribution and its strategic priority for succeeding in a world that is shifting daily.

So, legacy guys, listen up. Don’t get relaxed about your head start in the physical world. Amazon is closing in on you in every way. Step up and speed up your efforts to convert your store place into a personalized community full of ever-changing activities, entertainment and a super cool experience.

And you can win. Really.

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