Speed, convenience and cost are key advantages that have improved Amazon's fulfillment process, according to Brian Pitz. He's a research analyst at Jefferies & Company and he recently spoke with MarketWatch. Fulfillment would be his "weapon of choice" for online retailers operating in local commerce. It's being served by three advancements in Amazon's repertoire. They are drones, Dash Button and Kiva Robots and they have helped its Prime subscriptions grow by 20 times since 2005. Mr. Pitz says retailers may look to Amazon to help them increase their fulfillment efficiency in the future and consumers are not unlikely to appreciate the instant satisfaction of super-quick delivery, all of which makes Amazon a solid player.
Dash button and Dash Replenishment Service were created to take the headache and the planning out of shopping for goods that you can't be without. Dash Button is currently available to Prime members by invitation. Just attach one of these things to your washing machine and, when you realize you're running out of detergent, press the button. Shopping done. Your order will arrive as soon as your settings indicate it will. Dash Replenishment Service (DRS) is even simpler. Just use a DRS-enabled device or appliance and when you're running low on something, the connected device will order some more for you. So, if your DRS-enabled inkjet printer is running low on black ink, it will automatically place an order for a new cartridge. Enabled devices will hit stores this fall.
An important part of Amazon's strategy is providing quick shipping. Before the company started testing drones, it employed 15,000 Kiva robots in 10 US fulfillment centers. The robots decreased order processing time from about an hour to as low as 15 minutes, while reducing the product storage area by about half. That's a crucial upgrade, since "Amazon Prime Now" offers 1-hour and 2-hour shipping in about 35 zip codes and because Amazon Fresh, well, is called Amazon Fresh. Capacity expansion, processing time and delivery time have all been improved since the robots were activated. Kiva Systems is a wholly-owned subsidiary of Amazon.com.
Drones may prove to be Amazon CEO Jeff Bezos' most remembered legacy. Amazon has recently been given permission to test their specially-engineered drones in the US, by the FAA. The drones will be able to beat Amazon's fastest delivery time by 30 minutes. This is a power move. This is like Microsoft building the next X-Box with no Nintendo or PlayStation in sight. Yep, Amazon is doing that.
What do you think? Is Amazon onto something or are they too far ahead?