Tuesday, July 31, 2012

Amazon Says It Can’t Scale Same-Day Delivery Economically.

Amazon downplayed the idea of same-day shipping on its earnings call today, saying it had not found a way to do it on a broad scale economically.

Several reports have suggested recently that Amazon’s strategy is to move its distribution centers into urban centers, so that it can deliver products to consumers within a few hours after they hit the buy button.

But Amazon’s CFO Tom Szkutak said not to get your hopes up.

“On the topic of delivery speed to customers, we are trying to get closer to customers, but in terms of same-day delivery, we don’t see a way to do same-day on a broad scale at the moment. But we are always trying to figure out a way to serve them [our customers] better,” he said. “We don’t see a way to do that on a broad scale economically.”

While that still leaves the door open a crack, it appears from the company’s second-quarter call that while faster delivery may not make a lot of sense right now, the economics of building more warehouses in more central locations does.

85% of AaramShop deliveries across India (28 cities) are same day deliveries. It is able to do this largely on account of its hybrid retailing format.

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