An interesting thing started happening last year. Amazon.com, which for months had battled states over the collection of sales tax, began changing its tune on the issue.
It started agreeing to collect sales taxes on purchases in some states where it didn’t operate physical locations, while simultaneously inking deals to bring massive warehouses (and jobs) to population centers such as California, New Jersey and Texas.
As part of an ongoing special report on Amazon.com, The Financial Times’ Barney Jopson explains what was really going on. He writes:
“Amid the tax furore, Amazon is seizing the opportunity to expand its network of US warehouses – it had 34 at the end of last year – so it can place its merchandise nearer to big markets and offer same-day delivery to more consumers. That will erode one of the last advantages of the physical store: instant gratification.”
Classic Amazon.com. Turning lemons into lemonade, quickly pivoting on an issue and making it into what could be a significant business advantage.
In Seattle, we’ve been on the front lines of this radical shift, in part because the company has always had to collect sales taxes on purchases in its home state.
That’s meant Amazon could experiment with new ideas when it comes to the instant gratification of home delivery or in-store pickup, namely Amazon Fresh and Amazon Lockers.
For the past five years, Amazon.com’s lime green delivery trucks have ferried groceries and other products to the doorsteps of Seattleites. The company has continued to claim that Amazon Fresh is a “test,” and it has yet to expand to another U.S. city.
But, if Jopson’s thesis is to believed (and I think it is), we could see an entirely new Amazon.com in the coming years where the company’s delivery trucks and locker systems create a new physical component of the online retailer.
For years, Amazon, despite its rankings for top-notch customer service, has been a relatively faceless corporation. Hard to find customer support phone numbers. No physical retail stores. Basically, few human interactions. (Editor’s note: This post has been updated. See comment below)
The new physical components, lockers and delivery trucks, could put a face (sort of) on Amazon.com. (Has anyone else noticed how quiet Amazon Fresh trucks during their early-morning drop offs?)
Slate’s Farhad Manjoo suggests that this new push into same-day delivery will shake up the retail business. Majoo writes:
Same-day delivery has long been the holy grail of Internet retailers, something that dozens of startups have tried and failed to accomplish. (Remember Kozmo.com?) But Amazon is investing billions to make next-day delivery standard, and same-day delivery an option for lots of customers. If it can pull that off, the company will permanently alter how we shop. To put it more bluntly: Physical retailers will be hosed.
There’s a reason why Amazon.com co-founder Jeff Bezos is a backer of Uber, the private driving service, and Rethink Robotics, a maker of robotic technologies. (The company also lost money on Kozmo.com, one of its failed dot-com investments).
But, if nothing else, Bezos is a long-term thinking entrepreneur. And same-day, or home delivery, are things that the retailer could start to take to other cities beyond Seattle.
And the concept could go much further.
Corum Group’s Elon Gasper and Jon Scott earlier this year suggested that the online retailer should buy Coinstar, the Bellevue maker of automated retail kiosks.
“Together, Coinstar and Redbox already have thousands of automated kiosk-style vending machines in high traffic areas that consumers can order DVDs or video games from remotely and pick up when they grab dinner—all without human contact,” said Gasper. (See full remarks here).
They envisioned a brick-and-mortar retail scenario without sales clerks where Kiva (or for that matter Rethink) robots could work on the back-end to pick products, servicing the retail customer who interacted with the kiosk at the front of the store.
All of those very large warehouses that Amazon.com is building across the country, establishing a physical presence in states where it previously avoided the collection of sales taxes, could be the feeder systems to the smaller retail footprints.
Sounds a bit sci-fi. And that’s exactly why I think Amazon.com will do it, or at least a version of it. After all, Bezos likes to say that Amazon is “willing to be misunderstood for long periods of time.”