Amazon‘s standard of two-day shipping set off an arms race among major retail supply chains, and it might be starting all over again.
The e-commerce behemoth will be spending $800M this year alone to bring its standard free shipping time for Amazon Prime members down from two days to one, Retail Dive reports. One-day shipping is already available to members in certain high-density areas in North America, but Amazon seeks to make it the company’s global standard as soon as possible, Chief Financial Officer Brian Olsavsky told analysts in a Thursday conference call.
The acceleration announcement comes less than three months after another major logistics shift for Amazon: the creation of its own shipping arm to service both its own deliveries and that of other retailers. It has not renounced its partnerships with UPS, FedEx or the United States Postal Service, as Olsavsky said on the conference call that the transition to one-day shipping will require “the continued support of our partners.”
Olsavsky did not specify how the $800M would be spent among acquiring more real estate, upgrading technology or boosting its driver fleet, but when the industry leader announces such a broad shift in strategy, it has implications that reach far beyond its own balance sheet.
In the last few years, Target and Walmart have made major strides to match Amazon in terms of delivery speed, and have also been among the wave of brick-and-mortar retailers using their stores as one-day or same-day pickup spots. The competition is catching up to Amazon, and perhaps casting Prime memberships in a less favorable light in the process.
Further increases in shipping speed could prove more challenging for Amazon and others, as real estate for last-mile facilities is among the hardest to come by. Over the holidays, Amazon resorted to setting up tents on vacant lots to satisfy the seasonal demand. A more long-term shift would require more permanent, and costly, solutions.
One potential solution will likely come from within Amazon’s portfolio. The company has long suggested that it would use Whole Foods stores as shipping hubs, and was searching for larger locations to do so.
Source: Bisnow
Larry W. Genet is a Senior Vice President in the CBRE, Inc. Miami, FL office. As part of the CBRE platform Mr. Genet can provide a wide range of services from local to Fortune 1000 clients including agency and tenant representation, asset or portfolio management, high level logistics, labor and data analytics prior to site selection, project/construction management, capital markets, owner user sales and valuation advisory services. CBRE is the global leader for real estate services worldwide.
Larry has extensive experience in landlord agency, tenant representation, acquisitions, dispositions and property management. As a third-generation commercial real estate professional and South Florida native, Larry boasts deep community ties, an intimate knowledge of the South Florida market and numerous professional contacts. Larry’s leasing expertise of industrial, office, land, retail and medical properties coupled with his experience in acquisitions and dispositions gives him the ability to represent a myriad of clients in the South Florida market. Additionally, Larry controls a portfolio of 13.5 million square feet allowing him to see every deal in the market. This ensures his clients never miss an opportunity. His knowledge of tenants and buyers in the market is top notch and when coupled with his team's vast portfolio, it's a winning combination.
