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Amazon could deliver more quickly to additional areas but chooses not to due to cost. Now everyone else is pressured for "2 day delivery" and then have to use c

Amazon could deliver more quickly to additional areas but chooses not to due to cost. Now everyone else is pressured for "2 day delivery" and then have to use couriers that can deliver to pretty much everywhere in 2 days and incur the cost of that. Amazon decides to roll out their own logistics in areas that are dense/wealthy enough to make it much cheaper to deliver your package. All the vendors you mentioned are incurring a lot of cost to compete that way. Amazon would not mind if they lost a portion of Prime customers vs extending logistics to less profitable areas. When I first signed up for Prime, EVERYTHING was 2 days. No matter what warehouse it came from. I got 2 day air shipments of heavy things from 2000 miles away. And for 3.99 it would come overnight.

PaulHoule 4y ago
Sears and Roebucks made endless excuses in the 30 years they were going around the drain. (It started for me when they were soliciting credit card signups on a college campus and denied me for living in student housing... This is the only time I've been denied credit in my life.) Wondering about these questions last summer I looked at package tracking data for shipments I was receiving and did some simple simulations. I get a lot of packages from warehouses that are half a day's drive away, of course these are not driven directly to me, but it is very reasonable to aggregate traffic in nodes such that it gets to me in two days, you get only a small benefit from adding more nodes and stretching it out to three days. The more vendors that are "bought in" to using a logistic network, the faster the network can run economically because it can run more frequent trucks along the edges of the network. If Amazon thinks it is getting ahead by cutting out providers like UPS because they are unionized and end up building their own inferior network at great expense they may be just cutting off their nose to spite their face. The book The Goal points out that most people's commonsense gets it completely wrong when it comes to operations and logistics and one thing I'd point out is that, to first order, costs go up when you increase the time things spend in transit because it demands capital being tied up in inventory, paying for warehouse space, etc. It may be cheaper to send something a long distance via truck than by air but if it just coming from New Jersey or Pennsylvania adding days adds cost and opportunities for more quality problems such as packages getting lost, damaged, stolen, burnt up in a fire etc. Amazon's big problem is it has no moat. Granted there is a two-sided market in the Scamazon Marketplace but in the long term that is an exercise in brand destruction because each time you buy from it you are rolling the dice to get ripped off. Amazon Prime is a bunch of random services that don't hang together, it's the kind of bad idea that Sears would have gotten back in the 1980s. For instance the streaming video doesn't really add to the rest of the offering and there are so many other streaming services that there is nothing special about it. Amazon is going its own way to make a logistics network that might impress your congressman (he'll get half-day delivery from Virginia) but every other retailer is going to team up with UPS and FedEX to have access to a best-of-breed network for their constituents. If Republicans ever wake up to red states being redlined, Amazon's investments in politics will become a huge liability.

PaulHoule 4y ago

Sears and Roebucks made endless excuses in the 30 years they were going around the drain. (It started for me when they were soliciting credit card signups on a college campus and denied me for living in student housing... This is the only time I've been denied credit in my life.) Wondering about these questions last summer I looked at package tracking data for shipments I was receiving and did some simple simulations. I get a lot of packages from warehouses that are half a day's drive away, of course these are not driven directly to me, but it is very reasonable to aggregate traffic in nodes such that it gets to me in two days, you get only a small benefit from adding more nodes and stretching it out to three days. The more vendors that are "bought in" to using a logistic network, the faster the network can run economically because it can run more frequent trucks along the edges of the network. If Amazon thinks it is getting ahead by cutting out providers like UPS because they are unionized and end up building their own inferior network at great expense they may be just cutting off their nose to spite their face. The book The Goal points out that most people's commonsense gets it completely wrong when it comes to operations and logistics and one thing I'd point out is that, to first order, costs go up when you increase the time things spend in transit because it demands capital being tied up in inventory, paying for warehouse space, etc. It may be cheaper to send something a long distance via truck than by air but if it just coming from New Jersey or Pennsylvania adding days adds cost and opportunities for more quality problems such as packages getting lost, damaged, stolen, burnt up in a fire etc. Amazon's big problem is it has no moat. Granted there is a two-sided market in the Scamazon Marketplace but in the long term that is an exercise in brand destruction because each time you buy from it you are rolling the dice to get ripped off. Amazon Prime is a bunch of random services that don't hang together, it's the kind of bad idea that Sears would have gotten back in the 1980s. For instance the streaming video doesn't really add to the rest of the offering and there are so many other streaming services that there is nothing special about it. Amazon is going its own way to make a logistics network that might impress your congressman (he'll get half-day delivery from Virginia) but every other retailer is going to team up with UPS and FedEX to have access to a best-of-breed network for their constituents. If Republicans ever wake up to red states being redlined, Amazon's investments in politics will become a huge liability.