As you read this, I’ll be 30,000+ feet over the Atlantic, heading home from Frankfurt. With little time to write tonight, here’s the news that caught my attention this week:
- Google Adopts Delivery-Service Model, Targets Amazon (WSJ – sub. req’d)
- Amazon launches same-day delivery service in the UK (FT.com – sub.req’d)
- Amazon expands grocery delivery service to Brooklyn (Reuters)
- J.B. Hunt Operating Income Up 14% in Third Quarter
- Spot Market Stays Strong: September DAT Freight Index
- Teamsters Make History With First Ever Organizing Victory at FedEx Freight
- CSX profit up, beats forecasts as U.S. economy boosts freight (Reuters)
If you go back a decade ago, analysts like me urged companies to view logistics as a competitive weapon, but the advice fell mostly on deaf ears. Most companies viewed logistics as a cost center, with little strategic value; unfortunately, many companies still view logistics that way today.
Amazon and Google, however, have taken the advice to the extreme. Both companies continue to aggressively expand their delivery services. According to the Wall Street Journal, Google is expanding its Google Express service for same-day and overnight deliveries. Here are some excerpts from the article:
Starting this week, Google will charge $10 a month, or $95 a year, for unlimited same-day or overnight delivery on orders over $15. Nonmembers will pay $4.99 an order, or $7.99 if the order costs less than $15. Until now, the deliveries had been free.
The service…lets customers place orders online for products from physical stores run by retailers including Costco Wholesale Corp. , Staples Inc. and Walgreen Co.
Google said it is expanding the service to Washington, D.C., Boston and Chicago on Tuesday. It previously served the San Francisco Bay Area and parts of New York City and Los Angeles. The company is also adding retailers, including PetSmart Inc., Vitamin Shoppe Industries Inc. and Sports Authority Inc., and it has begun testing deliveries of some fresh food in the San Francisco area…At least three early participants—American Eagle Outfitters Inc., Office Depot Inc. and the grocery-store chain Lucky—have dropped out. Those three retailers declined to comment.
Meanwhile, Amazon has formed an interesting partnership with Connect Group to launch same-day delivery service in the UK. According to the Financial Times:
[Amazon] will deliver parcels to local newsagents and high street shops within 12 hours using Connect Group, the newspaper distributor formerly branded Smiths News. Demerged from WHSmith in 2006, the group delivers 40m newspapers and 14m magazines a week to its 30,000 UK customers including supermarkets, independent retailers and petrol stations.
Its new service, called Pass my Parcel, will utilise the group’s considerable overnight distribution network. Customers ordering online by 7.45pm will be able to collect their package from their local shop by 6.30am the next morning or, if ordered by 11.45am, from 4pm the same day. Customers will be notified by text or email that their parcel has arrived.
The UK is the world leader in click-and-collect delivery services. Amazon already has more than 6,000 pick-up locations, including London Underground stations and airports.
The bottom line: there’s a whole lot of experimentation going on with last-mile delivery, and I predict most initiatives will fail because they’re not profitable, but a few models will succeed, and they’ll transform the logistics industry as we know it. And it will happen sooner than we think.
And with that, have a happy weekend!
Song of the Week: “Cardiac Arrest” by Bad Suns