What Uber and Amazon tell us about the Future of eCommerce
With the push of a button, an Uber can promptly arrive outside my house and take me anywhere in the city I need to go. An experience that used to require calling a cab service, having them dispatch a taxi, and spending endless minutes over the phone for status updates has now been simplified into a seamless, 30 second in-app experience.
Amazon launched their Prime service back in 2005, charging customers $79 per year for free 2-day delivery across a variety of products. While Prime had steady user adoption between 2005 and 2011, it didn’t take off until 6 years later in 2011. This was due to several reasons, the most apparent being growth in their product selection. For years, Amazon had to invest heavily in their fulfillment infrastructure (e.g warehousing, shipping, etc.) to offer a wide enough selection for Prime to be valuable to customers. Similarly, Uber didn’t take off until late 2011 (2 years after being founded), as they needed to build enough network density within each city to become valuable to riders. Their asset-lite model enabled them to grow at a much faster pace than Amazon.
However, I believe that there lies another, deeper reason behind both Uber and Prime’s seemingly “coincidental” hyper-growth in late 2011. As both products became more attractive to users, they planted the seed for entirely new type of consumer – one that expects instant gratification. This created a symbiotic relationship, as the “Uber” consumer was attracted to Prime’s 2-day shipping, while the “Prime” consumer was drawn to Uber’s 5-minute pick up times. Both products built off each other’s momentum, and as they acquired more customers, their products became intrinsically more valuable.
So, what do Amazon and Uber tell us about the future of eCommerce? That the future of eCommerce will be driven by instant gratification. And that great fulfillment drives instant gratification.
Uber is now positioning themselves as a logistics network, leveraging their network density to offer same-hour delivery of household goods via UberRUSH. Amazon is pushing their fulfillment even further, spending over $4.55 billion last quarter on fulfillment alone, up from $3.5 billion the same quarter a year prior. They too are looking to control the last mile with two-hour PrimeNow delivery, and are even promising thirty-minute delivery times through PrimeAir drone delivery.
This trend will extend far beyond just Amazon and Uber. Other retailers, like Walmart, Jet and Target, will look to improve their fulfillment through similar programs (check out Walmart’s newly released Shipping Pass). Even the tech giant Google is looking to deliver Amazon-like fulfillment experiences with Google Express, offering free same-day delivery to their new customers.
Perhaps Toby Russell put it best in his TechCrunch article last August when he said “the next generation of retail will be dominated by online sales and direct-to-consumer logistics companies.” As consumers begin to demand instant gratification, great fulfillment will drive the next generation of retail.View Author’s posts