Amazon Delivery with 72% of the country covered may end up being be their biggest business of them all, but delivery is the trojan horse. By starting to gain access to homes, cars or garages, Amazon has also taken the second step to being the access controls and security company for your home and small office.
If I was ADT or Brinks I'd be thinking sale and soon. And if I was the cable company that was thinking about the smart home security market, I'd rethink my strategy about Amazon again. It not just the eyeballs Amazon owns and is taking away from cable. It's the customer running over your pipes. (See Rise of The Stupid Network by David Isenberg as history always repeats)
Here's Why
When FedEx first arrived like many thousands of people and business workers I gleefully signed up and got my account, an account I've had for over 30 years or more. Same number. Same billing process. Nothing has changed. Over the years FedEx became the modern workers' replacement for slow, untraceable Parcel Post, or then more expensive UPS overnight delivery service. They replaced airline counter to counter shipping and earned billions of dollars a year in business shipping of packages and letters that had to be there when it needed to be. Over the years their business expanded and the model has become more like the Postal Service in the USA. Less reliable. FedEx also expanded into ground shipping. Home Delivery shipping. They purchased Kinkos to become FedEx Office, largely as a retaliatory move to UPS buying Mail Boxes Etc. (They also stopped picking up from UPS Stores). In essence FedEx was becoming the post office, printer, ground delivery company. Heavy on physical assets like trucks, warehousees, planes, and people. UPS was doing the same. And then there was Amazon. Using them all, owning nothing. Learning. Observing. And doing better.
Parallels in Direction; Where Worlds Collide
Over the same period companies like ADT and Brinks began rolling up local alarm monitoring companies and eventually offered services for the same or less than the local ex-cop who started a security company, hired some ex telco repairmen to be installers, and used older landline and radio or cellular technology to protect your home or office.
And while ADT has brought technology to the center of their business to streamline costs and offer more features, they're not in every home, nor are they going to be. The sheer number of packages and addresses Amazon delivers to in the USA alone is way more than the homes connected by ADT which has only 8 million customers.
Amazon Prime is over 100 million. Of those members, on a regular basis 9 percent order almost every day.
That's more than the ADT installed subcriber base. Those are all addressable, deliverable and securable properties. And Amazon delivers to them regularly. Why would someone need ADT or Brinks or the cable company's idea of home security when Amazon can provide it better, and likely for less, or even no cost.
Over this same period where acquisitions were being made by all, Amazon was growing. And growing. And growing. And they are still growing.
OPA-Other Peoples' Assets-Like OPM
FedEx and UPS were the primary delivery teams for Amazon. Then came Prime. Fresh. Delivery from Amazon became a mish-mosh of FedEx's non morning delivery overnight, two day, ground and home depending on what was ordered, how big the box was, where it was being delivered, UPS, a bunch of local and regional delivery services. The Postal Service made a land grab for Amazon's business too, delivering small packages and Prime Fresh in major metro areas. Anything to stem the losses in their case and keep their union workers happy.
The Rise Of Amazon Delivery
Then we started seeing Amazon Prime drivers show up with packages. Some were Amazon people. Others were similar to Postmates or Uber Eats drivers. Gig economy workers who delivered the goods. Some trained. Some not so well. Amazon was migrating away from UPS, FedEx and yes, even the USPS.
But all the while Amazon was also doing something with each and every package we all ordered regardless of who the last mile delivery carrier was. It was the delivery data. Amazon was learning the same way Google Maps and Waze has learned by taking crowdsourced data they same way those mapping servies have replaced things like Michelin Maps the world over, or The Thomas Guide, the venerable local must have map book that existed in Southern California for years.
The Hub Arrives
Forget the need for more Amazon Hubs, now with entry to your car and home, Amazon is becoming the trusted delivery service provider. By crowdsourcing shipping data, knowing more about your delivery needs, the routes the packaged took to get to you, adding Amazon Hubs in office buildings, Whole Foods and where you live and work, and now having access to your garage and car when you're not around Amazon saves money but is really is being given your trust by you and saving money.
Here's how Amazon is doing this.
Why Ring Mattered
When Amazon acquired Ring, they bought what they hoped would be trust. With entry to your garage a way to reduce the cost of extra delivery trips (returning to deliver, taking back to the warehouse, leaving on trucks, etc.) Amazon can just as easy license that access to others like UPS and FedEx (if they want to) for areas they don't want to build out delivery networks on the ground yet, and what's more, give away Ring doorbell like cameras, where the retinal scan of the delivery person opens your garage to allow the delivery person in. That's trust. That also opens the door for more services to be sold.
With 72 percent of the country covered, once they reach about 78% of the nation, they can supply Ring like cameras to the customer base they deliver to who want trusted delivery. For the rest of the country UPS, FedEx, the Postal Service or local carriers can handle the rest of the deliveries. Amazon already is placing distribution center (DC's) hubs close enough to where business is and has already figured by route mile what's the best and most cost effective and fastest delivery option. As autonomous vehicles come online they can fill the gaps with short haul ground delivery or with drones take to the sky. Short haul, less than a load (LTL) services are already lining up for Amazon's high volume delivery business.
At home, by employing a razor blade strategy and giving away Ring cameras, through the bundling of them in with Prime, Amazon takes a major position in the access controls sector, a market that is worth reportedly 12 billion dollars a year and that doesn't really include residential. The home residential market for access and security is expected to grow at 15% by 2026.
Why It All Matters
So, when you put the delivery piece together with access and security, and bundle that into Prime, the backend automation with Alexa that ties to systems like August door locks and on premise cameras via Ring and more, and you have a full blown end to end delivery system, complete with verification of who delivered, when, what and where. With all these pieces Amazon can deliver secure and verifiable delivery just like UPS, but with delivery teams ranging from full time employees to gig economy workers. With the EERO acquisition Amazon has moved into on premise networking. Bundle and combine Ring + EERO to August Lock or any of the smart locks and cloud services you have alarm, monitoring, access and security. AWS can be the host of the data, and like your order history, the entry and access data can also reside there.
That's why delivery is just the tip of the iceberg, and why Amazon is really just starting to grow into something so Prime in your lives.
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