How Amazon's Same-Day Delivery Plan Could Put Retailers Out Of Business

For years, Amazon has fought to avoid collecting sales tax in the United States in order to keep its prices low. But now it's given up on that battle and is set to launch a same-day delivery service that could destroy American retail shops.

Farhad Manjoo has put together a wonderfully insightful essay over at Slate, which explores the impact Amazon's new strategy will have on the retail industry. To give some perspective, Amazon's decision to accept sales tax in the US as inevitable means it can change its play. To avoid sales tax in the past, it had a handful of large distribution centres. Now it's set to charge sales tax, it can legally set up smaller distribution centres in any state. In theory, that means it'll be able to ship products on the same day as the order is received. As Manjoo points out, that would be incredibly disruptive:

It's hard to overstate how thoroughly this move will shake up the retail industry. Same-day delivery has long been the holy grail of Internet retailers, something that dozens of startups have tried and failed to accomplish. (Remember Kozmo.com?) But Amazon is investing billions to make next-day delivery standard, and same-day delivery an option for lots of customers. If it can pull that off, the company will permanently alter how we shop. To put it more bluntly: Physical retailers will be hosed.

Whether Amazon can pull it off, of course, remains to be seen. You should read the Slate feature to gauge the situation for yourself — but it seems reasonably likely. After all, as Manjoo points out, if it can ship items cross-country overnight, so it sure as hell should be able to get them across one state in a day. At that point, you can kiss local businesses goodbye. [Slate]


Comments

    But even then, It will only be same day if you purchase before a certain time.

    I don't think the effect will be quite as profound as that. People like to get out of the house, and shopping is an excuse to do that! I know i much prefer being out and walking around to sitting in front of my laptop all day... dunno bout the rest of the world :P

    Bye, bye, retailers!
    Nah, they're not going anywhere. So many purchases require an in-person look, feel, presence to make a proper decision.

    I just hope against hope that it will become commonplace for retail stores to be little more than fitting rooms, where you can put on a plain shirt (say) of a certain cut and size so you can feel what it's like to wear it. Then the Kinect-like virtual mirror can show what you look like in different colours and patterns and you can order right from the on-screen interface, delivery today or tomorrow.

    Same with things like TVs or furniture: take a panorama or photosynth of your living room, then JB's VR headset can use that and the store's selection of products to show you approximately what it'll look like in your own home. The showroom will be basically the entire store - no storeroom necessary except for CDs, DVDs and other impulse items. Basically a reverse of the current "buy online, pick up in-store" idea.

      So have you look and feel, THEN buy it on amazon

        Isn't that called 'showrooming' and a big money sink for retailers since the people who check out their wares never wind up buying from them? I think that's part of the reason why most brick and mortar stores refuse to stock Kindles and other big ticket electronics.

        Or, have a look and feel and buy it right then, right there. A canny store with desirable goods would have an Amazon-powered whitebox website for you to order the goods from again, if you liked them the first time, and a deal that prevented Amazon from selling the goods themselves.

    I wish there was a distribution centre in Australia so I wouldn't have to wait 2+ weeks for an item.

      as good as that would be, i can only imagine that means the end of tax free amazon shopping, the whole reason we can get it cheaper than in retail stores is we avoid the sales tax as the distribution center isnt on australian shores, as soon as the dist is in aus, we would have to start paying tax again, negating the whole point of buying it from amazon in the first place

    Imagine you walk into your local electronics outlet like jb hifi, you try and negotiate a price or maybe they tell you it's a few days before it can be delivered. You have touched and felt it there and then you use your iPhone to order a cheaper one(or more expensive) that can be delivered same day (24hours). Those who think that retail won't be affected are kidding themselves. The average after expense profit of a business turning over revenue up to 3 million is about 13%. You lose even a few dollars to amazon and it's the difference of whether it's worth opening the doors or not. You can be assured that if I even had to pay a few extra points on a purchase that could be delivered same day then I would do it and I think it will even affect those eBay traders as well. Why would you ever need to use any other site, and I can imagine that in big cities you would see 24 hour deliveries happen.

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