Web

Amazon’s same day delivery push might spell an end to local businesses

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It’s pretty obvious that most consumers nowadays will choose to order from a reliable Internet source, such as Amazon, over buying something in retail stores if it means they can save a extra bit of money. The only exception to this notion is, of course, time. If you need a product immediately and cannot wait for shipping and handling, consumers will fork over the additional cash and buy the item in-store. But what if that extra money can be paid for same-day delivery? Amazon is pushing this feature more than ever, and this could mean big trouble for local businesses.

For the longest time, buying on Amazon proved to be a big money saver not only for the deep discounts on retail value, but also the lack of state sales tax on most items — including large electronics. This is possible because Amazon would set distribution centers in low-cost states then ship to high-cost states, making its famous two-day shipping on Amazon Prime a likable option. Now, Amazon is planning to start collecting state taxes in order to set up shipping warehouses in (or very near) those particular high-cost states so it can provide same-day delivery.

As Farhad Manjoo from Slate points out, same-day delivery has long been the holy grail of Internet retailers but “something that dozens of startups have tried and failed to accomplish.” But if a retailer as big as Amazon attempt to make it a standard process, could this truly be the end of local, physical businesses? So far, the company is planning to invest more than $1 billion in building new warehouses, including a $500 million project that would employ 10,000 people in the California centers. These centers will not only be in closer proximity to consumers, they will also have Kiva Systems robots help expedite the shipping process. Consumers will also have the option of same-day pickup at lockers located in local convenience stores where all they need is the password to retrieve their web-ordered item.

In an argument on Amazon’s side of the push, Manjoo states:

Physical retailers have long argued that once Amazon plays fairly on taxes, the company wouldn’t look like such a great deal to most consumers. If prices were equal, you’d always go with the “instant gratification” of shopping in the real world. The trouble with that argument is that shopping offline isn’t really “instant”—it takes time to get in the car, go to the store, find what you want, stand in line, and drive back home. Getting something shipped to your house offers gratification that’s even more instant: Order something in the morning and get it later in the day, without doing anything else. Why would you ever shop anywhere else?

Is this something you would prefer? If you are a business owner, how do you feel about this added competition?

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