Amazon.com announced today that it is offering same-day Prime delivery free of charge on over a million item shipped to 500 cities and towns. I'm not sure how many true markets that will be, but Seattle is one of them, and that's what matters most to me a the moment.
Same-day delivery is a simple concept (difficult to fulfill, but easy to understand), but the profound way this will change life and the fate of local retail is astounding. On the day of Amazon.com's acquisition of Shelfari, I became a good Amazonian and signed up for AWS (primarily for S3 laptop backup, which was a pain back then) and Prime. My first order using Amazon Prime was for lightbulbs and paperclips. Two days later they were at my door. I had 3 dark lamps in my house and never had paperclips that didn't come from work, and yet the need was not great enough to merit a trip to a drugstore. So in the dark I sat with messily unclipped papers everywhere. But prime changed that for me. I now have what I need in just a couple short days.
The introduction of free same-day delivery, however, will be just as transformative for me as my first Prime membership, but it will be far more transformative for retail ecosystem. Some thoughts:
There is no such thing as a shopping list anymore
We are now in a think-to-purchase society where you can buy nearly anything and have it on your doorstep. But we still build shopping lists for Trips to the store. This is the "I'm going to drive 30 minutes out to Target, let me look around the house, rack my brain, and otherwise pour out all of my good needed, so that I don't have to drive out there again the next day." That no longer exists. I need lightbulbs? I buy light bulbs. Oh, this recipe needs cinnamon? Click to cinnamon. And it turns out that buying it on Amazon is just about as easy as writing a digital shopping list. Open app, say what you're looking for, select and buy. Or if you happen to own an Amazon Echo, then this just became far too easy.
Same day means 4 hours
When we say same day, it's really more of a 4-to-6 hour timespan from order to doorstep. It could of course be longer, but in most cases this is what you're talking about. That means when you're thinking about things you need before work or on your lunch hour, those items will likely beat you home. And you save yourself the hour of stopping at that shop that's on the way, let alone the one that's out of the city (a reality of life in Seattle).
A fun story: My three boys, aged 5 to 10, approached me each with a wad of currency: $32.80 each on Sunday morning. They had decided together that they wanted to buy the latest Skylanders game, had figured out what it cost, and had brought me the full amount, which for one of our boys comprised his life savings. The fact that they did it together and worked cooperatively warmed my heart. So I picked up my phone to buy it. I saw that same day delivery was available, so I chipped in the $5.99 and we were done. The boys were super excited, got dressed for church and we rolled out. When we returned from church, there it was... on the doorstep... ready to play. It was delivered in 3 hours to our door, and my boys played together until we had to forcibly pry them away.
Amazon will be in your neighborhood all day long (and not UPS)
An interesting thing about same day delivery is that we will all begin to order more types of goods that we used to buy elsewhere. We also will be ordering items 2 to 7 days per week, since we are no longer making shopping lists (see above). So that truck will roll through our neighborhoods every day. And with predictive analytics goods will be loaded on trucks based on our past behavior, based on behaviors of the next neighborhood over, based on what we peruse or put in our carts (if you actually use your cart, I don't), and based on any number of data points: weather, traffic, birthdays, day of week, proximity to holidays, and so forth. This means that from time to time a item will be purchased that is already on your neighborhood truck, and it will show up at your door 15 minutes later. This will happen soon, if not at the start. But UPS is not currently set up for this. Amazon Fresh is. UPS could certainly move in this direction, but it would be a different model of service than has been done heretofore. So Amazon, a subsidiary, or a tightly controlled parter/vendor will begin to roll Amazon-only trucks for all types of goods. This is already true for Amazon Fresh, but it will become more viable in more markets and neighborhoods due to this Prime change. I predict that within 3 years the only Amazon goods that UPS will deliver will be those outside of the 1-2 million goods Amazon will deliver same day itself, those marketplace goods not fulfilled by Amazon, and those that are too heavy or bulky for them to want to deliver themselves.
Infrequent but important retailers are now obsolete
We have been predicting the death of brick-and-mortar retail for 2 decades now, and of course it will not truly not die... yet. But there are many key and important forms of retail in our lives that just took a hit. A short list includes: drugstores, office supply stores, light hardware (nails, picture hangers, tools... basically not lumber or large goods), home goods, and even grocery stores. They should all be put on notice. If I don't NEED to drive to your parking lot, find what I need, wait in line, pay, (give you my phone number... ugh), and then pack everything to my car, I won't do it. My need is for the goods and not for your "retail experience".
And the net of this point is that commercial retail real estate is going to have a shake up, with massive tracks of land with stores and parking lots will disappear, perhaps leaving room for the fleet of vehicles and mini distribution centers to occupy the vacuum.