A story in USA Today reports that Amazon.com is preparing a Sam's Club/Costco-rivaling service called Pantry.
Amazon has not commented on the story, and all USA Today was able to cite are anonymous sources, but the details of the service appear to be:
- an inventory of approximately 2,000 center-aisle grocery items, from cereal to paper towels
- available only to Amazon Prime members ($80/year for free shipping and streaming movies & TV shows starts to look a little better)
- no brick & mortar yet, items will ship from existing distribution centers
- single-size box, holding as much as users can fit in there without exceeding a weight limit
- flat-rate shipping
Its the shipping method here that makes Amazon's latest (supposed) business venture so interesting. Companies around the world work to continually improve their shipping efficiencies, from auto manufacturers creating flatter body panels that stack in transit to packaging redesigns that cut box size allowing more to fit on a pallet/truck/train/ship. Amazon has seemingly struggled mightily with this, often making mistakes like sending 20 little packs of batteries across 20 large boxes, and other shipping quirks that can be seen here and here, The most common reason given for this is the company's strong focus on palletization, with all the packing requirements (item, packaging, box size, etc.) determined by a computer network making Big Data-reliant decisions.
With Amazon Pantry service charging Prime users for shipping (Prime users are typically provided with free shipping), and the company allegedly touting a flat-fee, fit-as-much-as-you-can-in-the-box-type service, using more than the minimum number of boxes means Amazon Prime users are paying excess for wasted space.
Quick delivery of household items looks to be a future business channel -- Sears' experiments with MyGofer and the proliferation (return?) of brick & mortar-backed grocery delivery services stand as testament to that. The real question in all this is whether Amazon can effectively configure a packaging system to accommodate such a shift. And that's a solid question.
Their current shipping system analyzes the end location of orders, truck size, and product size, and focuses on palletization of those boxes. With Amazon Pantry, the company now has to go a level deeper. Pallet efficiency is already factored in with box size, so the primary driver behind shipping efficiency is customer satisfaction. The company must turn it's data -- it's unbelievably large volumes of data -- to determine the best way to package a collection culled from 2,000 items safely and efficiently, and then communicate this packaging plan to distribution center employees.
Realtime, 3D plan-o-grams? Hours of efficiency training? Laser guidance? Developing boxing best practices? How the company handles the translation of this data into an implementable shipping solution will be the challenge of Amazon Pantry.
Image courtesy of Bloomberg.com