retail news in context, analysis with attitude

The New York Times reports this morning how how is building millions of square feet of warehouse space in places like California, Indiana, New Jersey, South Carolina, Tennessee and Virginia, which will put its distribution mechanisms for a wide variety of products much closer to shoppers than their existing facilities.

"This multibillion-dollar building frenzy comes as Amazon is about to lose perhaps its biggest competitive edge — that the vast majority of its customers do not pay sales tax," the Times writes. "After negotiations with lawmakers, the company is beginning to collect taxes in California, Texas, Pennsylvania and other states. But Amazon hopes that the warehouses will allow it to provide better service, giving it the ability to up-end the retailing industry in an entirely new way.

"Amazon will soon be able to cut as much as a day off its two-day shipping times, said Jeff Bezos, its chief executive, in an interview. This will put the much-rumored same-day delivery — the elusive aspiration of every online merchant — potentially within reach in some metropolitan areas."

“We want fast delivery,” Bezos tells the Times. At a minimum, he says, “we can work on making it the next day."
KC's View:
"At a minimum." Those may be the most important words in that sentence.

There seems to be no question that Amazon believes that next day and even same-day delivery (in some markets) could end up being one of its greatest differential advantages. As the Times notes, Bezos is willing to spend a ton of money and dramatically reduce Amazon's profitability in pursuit of something that he thinks will have a sustainable impact on the company's long-term existence.

And this will include groceries.