Arguably, the two companies benefiting the most from the .com ecommerce revolution are FedEx and UPS. These two giants have seen their infrastructure strained and their wallets fattened as the use of the web for buying products has grown.
As Amazon well knows, the delayed gratification effect of waiting for 2-7 days for your new gizmo is the most significant barrier for users. The cost of shipping is also impactful for products in the under $20 range.
In order to make the model more efficient, Amazon and others started building fulfillment centers around the US and Canada. These were warehouses to more efficiently disburse products to the shipper and out to the user, by storing popular products locally. In part because of this it allowed Amazon.com to drive down the cost-per-item for shipping even further.
Idealab! has funded shipping.com, which I pointed out a few months ago on this list. These guys will combine very local fulfillment centers and a fleet of vans a la Peapod et al.
The interesting thing that will happen is likely to be a consolidation over time. I also think that once you have a distribution chain set up already, you’re squeezing value for each customer like water from a sponge. WebVans already brings me my groceries, so why don’t they bring me my dry cleaning, my Amazon.com books, my DVDs, etc.
What will happen, and this is interesting, is that companies will realize the value of customer ownership in the delivery space. The delivery process will become a CHANNEL rather than a cost-center, which means that WebVans will now be able to offer up their customers to DVD Express and others.
Clearly Jeff Bezos has figured this out.
Behold the Evidence:
Amazon to offer one-hour delivery March 20, 2000 by Adam Feuerstein
Amazon.com (AMZN) will offer customers a one-hour delivery option for books, CDs and toys through a partnership announced today with Kozmo.com.
The leading online retailer has invested $60 million for an undisclosed stake in Kozmo, which delivers videos, food and other convenience items to shoppers. As part of its investment, Amazon says it signed a three-year strategic alliance to begin offering the new delivery option.