News Feature | November 17, 2014

Amazon Tests Taxis For Same-Day Delivery

Source: Innovative Retail Technologies

By Brianna Ahearn, contributing writer

Amazon Taxi Delivery

Amazon has expanded its delivery options for Prime members in a number of ways in recent months, including adding Sunday delivery for multiple locations as of May 2014. The retailer is constantly looking for ways to get customers' orders shipped quicker. The company is now testing a new way to get same-day orders direct to the consumer's door in a matter of hours, by using taxis, reports The Wall Street Journal. The testing is underway in San Francisco and Los Angeles.

The newspaper reports that Amazon has launched the test by ordering cabs to local fulfillment centers in the area, then loading taxis with up to 10 packages bound for the same zip code, and paying $5.00 for each package delivered within the hour. The retailer summoned the cabs using the mobile app Flywheel, a mobile application that lets users order a taxi in Los Angeles, Seattle or San Francisco. The retailer initiated the test to study how taxis could help speed up the order fulfillment process for consumers. The Wall Street Journal said the deliveries occurred during hours when taxi traffic is low, so as not to threaten people's daily transportation needs. The first test behind them, now retail analysts look to see if Amazon will conduct similar tests in other Flywheel-ready cities.

Amazon suffered high profile delivery delays last Christmas, when a large volume of packages were stalled in a delivery center. Mail carriers UPS and FedEx cited inclement weather as a reason for the delays, and Amazon scrambled to offer $20.00 gift cards and refund shipping charges to those customers affected by the lag. Based on Amazon's latest moves, it appears they don't want a repeat of last year's holiday season, and are trying every route to avoid it. Order fulfillment is a concern of all retailers, but as the competition between brick and mortar stores versus online retailers heats up, Amazon is trying to lead the pack in getting customer orders processed and delivered within days or even hours. The retailer currently offers Amazon Locker, a service that allows shoppers to pick up their orders in a secure location. Amazon Locker isn't a foolproof service, however, as many consumers may not reside near an eligible location. The need to locate other ways of order fulfillment is Amazon's task at hand, especially as other retailers, such as Macy's, test same-day delivery.

In December 2013, Amazon was the focus of a CBS 60 Minutes segment where founder and CEO Jeff Bezos shared his vision for the future: drones. The service, known as Amazon Prime Air, is currently in development. Amazon has made a marketing video and information about the program, as well as job listings, available on their website for consumers. Amazon Air is projected by Bezos to deliver packages within a half hour of ordering. The drones will be able to carry orders weighting to five pounds, which generally covers most media types, such as books, CDs, and DVDs, plus a number of consumer product categories.

One conclusion is that Amazon is determined not to be hindered by any delivery delays caused by weather or the major delivery services of FedEx, UPS or the US Postal Service. With drones still several years away, and not every service the right “fit” for every consumer market, it makes sense that Amazon is exploring all of its options. Urban cores, such as New York City and Los Angeles have a high population of taxi services, and thus a program of delivery by taxi is a worthy venture. Taxis are a good option, because the vehicles may already be on the road, and thus won't require much maintenance. The vehicles are also relatively affordable to operate, especially compared to the costs of a large delivery truck.  There are currently 100 Amazon fulfillment centers throughout the world, and the company uses trucks to deliver most of their goods to consumers. The taxi option, coupled with drones in later years, would represent a “patchwork” of options available to consumers to get their orders in a quick and reliable manner.