Amazon.com: Developing Same-Day Delivery Capabilities

            
 
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Case Details:

Case Code : OPER109
Case Length : 20 Pages
Period : 2009-2013
Organization : Amazon.com
Pub Date : 2013
Teaching Note :Not Available
Countries : US; Global
Industry : E-commerce

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.



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"It's hard to overstate how thoroughly this [Amazon's] move will shake up the retail industry … Amazon is investing billions to make next-day delivery standard, and same-day delivery an option for lots of customers. If it can pull that off, the company will permanently alter how we shop. To put it more bluntly: Physical retailers will be hosed"

Farhad Manjoo, Slate , in July 2012.

In August 2012, Amazon.com, the world's biggest online retailer, announced that it would introduce same-day delivery of its orders as a service option to its customers and make next-day delivery standard service. This move came in response to the regulatory changes in some states of the US that required consumers to pay sales tax, which in turn would strip it off its price advantage. In order to stay ahead of the competition, Amazon decided to cut its shipping time. In 2005, the company had introduced free two-day shipping and discounted one-day shipping rates in the US on eligible purchases for a flat annual fee under a service known as ‘Amazon Prime'.

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The same services were introduced in Japan, the UK, and Germany in 2007, in France in 2008, and in Canada in 2013. Apart from ‘Amazon Prime' services, in 2009, the company had introduced same-day delivery in 10 big cities which were close to Amazon warehouses and only on certain items ordered in the morning (before 7 A.M). In 2012, it decided to roll out the same-day model for all.

However, analysts were skeptical about the success of this extended model due to the logistic hurdles that the company would have in the process, the large scale of operations needed, the extra costs involved for the company, and face reluctance to usage by consumers. Some argued that if successful, this model would become a nightmare for small retailers and would threaten their very survival. While speculations about the success and failure of Amazon's same-day delivery model of Amazon were just one side of the coin, the competition that the model would face with the entry of other big and small players like Walmart , Postmates , Instacart , eBay , etc., in the same arena, was the other.

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