Amazon Prime Expansions and Dynamic Waves

By Alex Batty, MHI Marketing Communications Coordinator |@mhi_alex

A couple of days ago, I got an email from Amazon saying that Prime Now is now available in my area.

Which prompted a frantic Google search to see what else they’ve changed since I last checked.

So here it is.

Prime Now is a service in select areas that offeres 1-2 hour delivery on select items. It was rolled out in 2014 in Manhattan, but the service has been slowly growing in large metropolitan areas and is in about 30 US cities so far, along with large international hubs like London, Paris, Barcelona, and Tokyo.

To keep up with the 2 hour delivery windows, Amazon also launched Amazon Flex, which is basically Uber for deliveries. Drivers are contracted to deliver packages and work in delivery blocks that they self-select. Amazon Flex delivers both Prime Now and regular Amazon packages. Prime Now deliveries are handed straight to the customer and can generate tips, while regular packages are left at the door as usual.

Amazon also bought Whole Foods for the low, low price of $13.7 billion. The e-tailer is slowly moving to corner other markets not previously associated with e-commerce, such as groceries, but with Prime Now and the Whole Foods acquisition, we’re seeing a push from Amazon that shows a desire to be a leader in all commerce markets, including fresh food. I’m going to keep an eye on this one, because as much as I love Amazon, potential monopolies set off all sorts of alarms in my brain.

source: iwastesomuchtime.com

And of course, Prime Day. Not new, but happened recently. I will be honest, the first iteration of Prime Day was a bit disappointing to me, as was its follow up, so I didn’t expect much out of this one.

But they got me. They got me good. But more on that later.

CNBC also ran a story that Prime Now can be beneficial for competitors. They can run and promote their own markdowns to take advantage of the surge in web traffic. For example, Walmart gets an upswell in clicks for people looking to price compare (which I definitely did).

Moving on from Prime Day, Amazon has filed more patents. Now, Amazon patents stuff all the time. We’ve talked about Amazon patents before, and a patent doesn’t necessarily mean that it will happen in the future – but it’s a good indication of where the company would like to go. Amazon recently filed a patent for a vertical drone delivery hub geared for urban centers.

Amazon warehouses and DCs are mammoth buildings (you can get a peek in one here). But this new hub goes vertical – and digital. The bottom level would allow trucks to load and unload product, with the tower expanding upward for both storage and drone launching.

Amazon’s vision of a UAV delivery center (Credit: USPTO)

This shift is all a part of the emergence of smart cities – cities that are digitally connected and have services adapted to urban crowding. You can read more on this emerging development in the 2017 MHI Annual Industry Report, which you can download at https://www.mhi.org/publications/report

This is all cool and good for the consumer, but how is supply chain going to keep up?

Craig Moore writes on dynamic waves, or waveless processing. Basically, rather than traditional wave processing, which followed the traditional ebb and flow of shipping times (i.e. high for Christmas, low in the summer), dynamic waves uses a system that constantly reprioritizes order pools based on cutoff times, inventory levels, and resources.

This is helpful because it avoids lulls. Orders can flow into the system and be processed without having to work around pre-set waves. Avoiding lulls ups productivity, increases labor management, and helps exceed (or meet at this point) customer expectations. Same day delivery becomes much more manageable.

Companies can’t really stick with traditional waves any longer because people don’t order that way anymore.

A prime (*wink wink*) example of this is Amazon’s Prime Day. I can tell you from personal experience that they had multiple small orders coming in all day from the same person (me. And also my desk buddy), because they set it up that way. Amazon is riding the dynamic wave, and at times leaning into it by spacing out deals to extend customer time on the site. This leads to multiple small orders spread out, but can also bring in more spending because customers are:

A) not thinking they’re spending that much all at once

B) thinking they’re getting a great deal and buying even if they don’t really need it

C) customers waiting for the deal are likely to browse other sections of the site, leading to buying other things

I fell victim to all three of these things on Prime Day, yet I consider myself a cheap shopper. But it is so easy to fall into it when they space it out and promise a-MA-zing deals.

So, did your wallet get hit as bad as mine with Prime Day? I’ll get the carnage when I get home today (yay 2-day shipping), so we’ll see what was actually worth it. Which brings up a whole other issue: returns. And with Prime, FREE returns (free for me, not Amazon). But that is a story for another day. Perhaps I will be inspired surrounded by my cardboard wreckage this evening.

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