Amazon.com: Developing Same-Day Delivery Capabilities

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Amazon.com, Inc. (Amazon) headquartered in Seattle, Washington, US, was the world's largest online retailer. It started as an online book store but later diversified its offerings to DVDs, CDs, MP3 downloads, software, video games, electronics, apparel, furniture, food, toys, and jewelry. It allowed manufacturers and sellers to sell their products through its websites. It further offered its own consumer electronic products like the Amazon Kindle e-book reader and the Kindle Fire tablet computer. It was also a major provider of cloud computing services. By December 2012, the company had separate retail websites for the US, Canada, the UK, France, Germany, Italy, Spain, Brazil, Japan, and China with international shipping facility to a few other countries...

In 2013, Amazon.com was a Fortune 500 company and a global leader in e-commerce. It had a wide array of products, international sites, and a worldwide network of fulfillment centers and warehouses and customer service centers. It had developed a customer base of around 30 million people. The company was a retailing site that followed a sales revenue model and made money by taking a small percentage of the sale price of each item sold through its website. It also allowed sellers to advertise their products by paying a fee...

Over the years, Amazon had been pitching on the price of the products it offered to compete with other players. It offered products at very low prices as it did not charge customers sales tax on the products. For instance, when a customer purchased a laptop of about $1000 from a brick and mortar store, the company collected local sales tax of say $100, and the customer ended up paying $1100. However, Amazon was exempt from the rule. The 1992 US Supreme Court ruling said that ‘only firms with physical presence in a state are required to collect taxes from residents'. Amazon avoided having a physical presence in the states that required e-tailers to charge sales tax. This helped it keep its prices low as it followed the strategy of locating its distribution centers far away from such states. So, when a customer from California ordered a laptop, Amazon shipped it from its warehouses located in some other state...

Though Amazon's same-day delivery was considered by many as a game changing strategy in which the company could succeed by leveraging on its strong supply chain, Amazon had a bigger challenge ahead – competitors too began offering same-day delivery service. In October 2012, Walmart, hoping to beat Amazon, began testing its same-day delivery business model for products that were sold online in the US markets. It had been experimenting with the model in San Jose, California, for more than two years...

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