The Amazon Effect on the Retail Apocalypse
How Amazon is using AI and robots to offer same-day delivery to customers
It’s safe to say things are looking down for retailers. America’s retail apocalypse hit its 10-year high in 2018 with more retail square footage closing down than during the peak of the Great Recession.
With all the bankruptcies, the dwindling number of malls, and the ease of shopping in your own home, more and more consumers are turning to their computers when they need new clothes, a new vacuum or even groceries.
But even in the convenience of online shopping lies a major deterrence. You can’t have whatever you’re buying instantly. It’s the latest concession to the “I-want-it-now” economy, but as always, Amazon seems to have a solution.
Amazon’s Same-Day Delivery
Two-day shipping is going out of style. Amazon has invested heavily in technology and has extended the latest logistics all the way to its delivery chain. The retail giant’s deep pockets and remarkable logistics technology allows Amazon to offer same-day delivery in 14 metro areas of the country.
Currently, if you order an item that qualifies for Amazon same-day delivery before noon, it will arrive at your home by 9 p.m. that night. It’s available seven days a week and Prime members only pay up to $5.99 per item under $35 for same-day or as low as $2.99 for one-day shipping – non-Prime members pay additional fees for same and one-day shipping.
However, Amazon recently released that it will soon promise one-day delivery for its U.S. prime members on most items.
Amazon continues to raise the customer service bar to new heights. But how do they do it?
The Houdini Factor
Amazon executives have used the term “Houdini” in reference to the company’s newest delivery services, including same-day delivery and Prime Now, which delivers household staples in a matter of hours. Using artificial intelligence (AI), Amazon computers analyze piles of data and perform tasks (based on projections), powering the company’s same-day capabilities with an uncanny ability to forecast customer purchasing patterns.
For example, its AI can narrow product demand forecasts to the anticipated number of skirts, down to the expected sizes and colors. The next step is to position those skirts where customers can get them the day the customer clicks “buy.” In other words, Amazon’s Supply Chain Optimization Technologies Group forecasts where those skirts should be stored so they’re as near as possible to the people expected to purchase them.
This concept of anticipatory shipping dates back to 2013 when Amazon hit upon the idea of staging merchandise as close as possible to customers before they’d even clicked the “buy” button.
Houdini indeed.
Logistics ‘Robots’
In addition to its use of AI in product forecasting, Amazon uses robots that resemble an automated vacuum cleaner to do the heavy lifting in its warehouses. These smart robots know what needs to be packed and when it must be shipped so everything stays on schedule. It’s all controlled by AI, which orchestrates the shuffling of shelves by robots in warehouses as large as 1 million square feet.
Amazon’s robotics division is also working on replacing inefficient handheld scanners, which often need to be reprogrammed, with cameras that automatically scan products as soon as workers pick them up. And the days of packing by hand at Amazon may be numbered as well, because robotics technicians are developing robots with hands that can hold and grip, just like a human.
Conclusion
With high tech AI and robotics doing so much of the work, Amazon seems positioned to move seamlessly from same-day to within-the-hour delivery and revolutionize logistics. However, with the cost viability for customers in question, it remains to be seen whether and for how long customer demand will keep up with the pace of technological advances. Still, the remarkable strides that are being made will continue to force Amazon’s chief competitors (and fringe deliverers) to achieve the same level of customer responsiveness.