Amazon announced this week that it would begin making Sunday deliveries. The roll out begins this weekend in New York and LA. In 2011 it will cover much of the U.S., including Dallas, Houston, New Orleans and Phoenix. In an ironic twist of fate, the failing U.S. Postal Service will handle deliveries.
Here are the details: The service will be available to Amazon Prime members who pay $79 per year for expedited, delivery as well as video services. That means that Prime members will be able to place an order on Friday and should be able to have it in hand on Sunday. The service is also available to non-Prime purchasers who spend more than $35 on purchases (recently up from $25) for free 5-8 day delivery.
Where’s the value in all of this for Amazon? It looks like they’re giving away stuff for free. It’s likely a case of CEO and Founder Jeff Bezos looking at the long term. Right now online retail accounts for just 10 percent of all retail in the U.S. Bezos is trying to make significant inroads there, making Amazon the future retail go-to for all of America’s (and the world’s) needs. Toward that end, Amazon has been building more distribution centers and even experimenting with same day delivery. It’s all about building for the future.
When you break it down, it’s probably not even costing Amazon all that much. Amazon is presumably banking on more purchasers becoming Prime members and thus forking over that $79 annuity. Once purchasers do join, it’s quite likely that only a small number of purchasers will actually require Sunday delivery. Plus Amazon is scoring big on PR for this move. Not only are accounts stressing customer service but they’re also looking at it in the context of helping out the USPS. On the latter point, the reality is that it’s not likely to provide much in the way of sustenance to the postal service which at this point is just hemorrhaging cash.
Undoubtedly there are many out there who see this as a foolhardy exploit by Jeff Bezos. Some look at the extraordinary time horizon that they project for etailing to come to a par with retailing. Jeff Bezos, however, doesn’t go in for half-baked initiatives, at least most of the time. He usually wins and makes money in the process (apart from his founding of Amazon some may recall that he personally was an early Google investor). For more on Bezos and Amazon, I heartily recommend Brad Stone’s new book, “Jeff Bezos and the Age of Amazon.”