It’s the year 2016, the Culture of Now and instant gratification is the new normal. You can download apps, games, and even books in an instant, only slowed by the strength of your connection to the web, whether that is through cell towers or WiFi. A series or movie can be rented or bought on the go, watched on a mobile device and continued at the same point on your television as soon as you reach your home.
The days of trips to the video rental store,
Mobile apps are one of the most common means for consumers to search for, learn about, and even purchase products. By 2017, it’s estimated that users will have downloaded over 268 billion apps. But even if you order a product through an app, it still takes time to get to your door.
Jimmy John’s sandwiches boasts Freaky Fast Delivery, but that really isn’t that shocking. The restaurant industry has always been big on offering the convenience of speedy delivery. What is different is the entry of Amazon and others into same day, two hour, and even one hour delivery of certain items. Most are things that if we wanted them instantaneously, until now we would have had to run out to a brick and mortar store, pick them off the shelf, and purchase them before returning home. Now in the time it would actually take to run that errand, the item can be at your door, without you having to get dressed.
Last year, Amazon Prime Now was launched in a few select cities. A number of markets have since been added,, and with the success of the service, it seems that trend will continue. Many even say Prime Now is Amazon’s biggest retail gamble to date, and one that seems to be paying off.
The e-retailer does have competition in this arena. Uber is experimenting with UberRush, a delivery service available in some cities. Google has it’s own delivery service, Google Express, as do Deliv, and Postmates, both dedicated delivery services. All promise rapid delivery of a number of items, but none of them can match the potential variety and speed Amazon’s infrastructure and product line enables them to offer. At least not yet.
With the unveiling of its drone prototype, and a promise that by some time in 2017 half-hour delivery will be offered in some areas, it makes one wonder a few critical things: how fast is fast enough? Can this model as an added benefit of Prime be sustained? What does this mean for other small businesses?
Not Every Customer Will Use Prime Now
Before panic sets in, and businesses cry about how they just can’t compete with this kind of distribution power, variety, and speed of delivery, a quick look at some real numbers can be pretty soothing. The problem with looking at hard numbers? Amazon doesn’t release them. But we can make some assumptions based on the data we do have.
Amazon doesn’t say how many prime members it has, but they did release that they added 3 million members in the third week of December 2015 alone. Macquarie Research estimates that 25% of U.S. households are Prime members and that the retailer added roughly 7 million new members in 2015. according to Forbes. But that research was before Amazon’s latest announcement and the number could actually be much higher. Macquarie estimates that membership will double by 2020, and Amazon is doing everything it can to add benefits to the program.
An astounding 15% of non-prime consumers surveyed spend more than $800 with Amazon annually, but 40% of Prime members spend over that much in their first year with the service. Four years in, 70% of overall members spend that much.
Keep in mind that Prime members, who pay $99 a year for memberships, are already at least partially covering the cost of Prime Now services, and it’s not available everywhere, nor is it likely to be. Such rapid service is much easier to achieve economically in a dense urban area, where a courier can make several deliveries an hour, but it much less practical in smaller, less populated areas.
Obviously, the culture of now is being defined by the availability of these services. But not every customer can or will use them.
The Impact of Drones
The impact of drone delivery has yet to be seen, but we might see at least some experimentation this year. This is another feature that at least at the moment appears will be driven by Prime members, and will at least at first be more of a marketing victory that actually practical for most consumers.
It will allow the retail giant to expand where it can offer rapid delivery, although most drones only have a range of 15 miles. While the FAA has offered an exemption for these, and other drones, to fly when out of visual range of the pilot, what kind of regulations will be imposed before the program is fully implemented remains to be seen.
The good news is that if Amazon is successful, it’s likely other drone delivery systems will rise up to compete, offering delivery options to other businesses on a fee per delivery basis. Fedex has warned of the dangers of drone delivery, while at the same time experimenting with its own drone prototypes.
But there are other factors that will affect the consistency of delivery: weather, battery life, and potentially unreliable location data are a few. that’s not counting aggressive pets, the birds that share the sky, gun toting neighbors, and conspiracy theorists.
Keeping these in mind, it’s unlikely the sky will be filled with fleets of delivery drones soon, stealing away business from anyone.
We all have to make Money
Amazon doesn’t have to make a huge profit. In fact, at least for now, the rise of their stock is based largely on the premise they will eventually pay dividends, but so far the company is not cash rich. Most profit flows back into development or expansion.
Therefore it remains to be seen how long Prime Now will be viable, and whether or not such rapid delivery times will spread to other businesses. In fact, not every business or product lends itself to this kind of instant delivery.
Most customers don’t expect small business to match the speed and variety of Amazon. But they do expect some kind of value. However, value is not just in price or speedy service. “Innovation is creating new value, not always something new,” says Dr. Charla Griffy-Brown of Pepperdine University in a webinar about big data and innovation. “Increasing customer loyalty allows you to create new value.”
Critical elements to creating this value online involve:
- Creating a mobile friendly User Experience
- Being Social Media friendly and savvy
- Giving something away to drive your sales funnel
- Offering a unique product and.or service
- Paying attention to customer feedback
Can your business compete in the Culture of Now? Is instant or near instant delivery the answer? Despite the seemingly intimidating prospects of Prime Now and other on-demand delivery services, the seemingly unavoidable impact of drone delivery, businesses can still make money by managing customer expectations and providing innovations that provide value.
Still, it might not hurt for businesses to collaborate on ways to meet customers’ increasing demand for instant or near-instant gratification. The Culture of Now feels like it is here to stay, and businesses that join the revolution early may be better off in the long run.
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