In 1995 I first became a customer of Amazon. Back then it sold books and had just over a dozen employees. Despite its rough origins and thin margin book focus, as an analyst in those days, I tore apart Amazon’s model and came to the conclusion that Amazon would become the “Walmart of the Web,” selling everything.
I shared that sentiment in my column back in those days, perhaps something the company hadn’t yet thought of … of didn’t want others to consider yet as it was just a clunky website, a GUI book catalog.
No 2-day shipping.
No international presence.
Very few Americans had used it.
In 1997 Amazon’s founder, Jeff Bezos, was my guest at a conference I hosted along with the who’s who of the Web. Straight spoken, direct, a programmer type of person. Sharp.
Before it’s initial public offering of stock I recommended Amazon (NASDAQ:AMZN) shares as I saw tremendous potential ahead for it in ecommerce outside of books. It went public at $438 million market cap and recently soared passed the $1 trillion market cap in value.
However, as Goliath can attest, a small sling and stone placed appropriately can cause a problem.
Or, to use another analogy, Amazon’s achilles heel.
What is it? Amazon has no direct control over its distribution.
Amazon relies on UPS, FedEx, USPS, OnTrac and several other delivery services to get the goods you purchased to your door … ON TIME.
Especially with Amazon’s Prime Service. More than 100 million people pay more than $100 per year for the 2-day delivery service. Yes, Amazon also bundles in video/shows/movies to this but it’s a lot of back catalog stuff, many of which are obscure. The core value proposition of Prime is ‘free’ 2-day delivery (not actually free since it’s $119/year).
The focus is 2-day delivery…lately it hasn’t been that in my experience. Two orders in the past 45 days or so have not arrived on time. One was completely not even sent – fulfillment by Amazon – and a review I did on that item was not published by Amazon. Basically the review was: didn’t get the item, never sent.
The 2nd item was supposed to arrive by 8pm (which makes it more like 2 ½ day delivery most times as items arrive about 7:30pm-8pm, never in the morning.
99% of Amazon works great. But that 1% is the leaking hole in the balloon. The lack of delivery control. No guarantees.