e-Commerce Deliveries

 

Like many others, I am working from home these days and have basically been doing so since March.  I have a lovely home office, which may be the subject of a post later this month.  As we are at the end of the cul-de-sac, my office is in the front of the house, and it has seven windows, I have a great view of our street and the comings and goings.  During this pandemic, the comings and goings are for the most part lawn crews and e-commerce delivery vans and trucks.

The number of e-commerce deliveries noticeably increased with the start of the pandemic.  About half of the deliveries are Amazon.  The remainder are UPS vans or leased Penske trucks which could also be delivering Amazon packages.  Today, I saw actually saw a FedEx which when I saw it hit me as surprisingly rare.  The only time I notice a USPS truck is when they are delivering our daily mail. 

I use Amazon for sure, but not as much as a few of my neighbors who are younger and have school aged children.  I am guessing that they probably are giving Alexa orders throughout the day.  They will get up to four deliveries a day with a norm of one or two.   I have had two Amazon deliveries in a day on occasion and, I believe, I got three deliveries in one day once.  These statistics are, of course, anecdotal.  I have not kept a tally, but I think my observations are relatively accurate.

Given my former profession and that I am a professor of operations management now, I cannot just notice these delivery vans and trucks (that would so Gladys Kravitzy).  I also have to process what I am seeing; and my impression is that the way they are scheduling and dispatching deliveries may be inefficient. 

     Let’s go back, before the Amazon, before the internet, and before FedEx.  Basically, let’s go back to the 1960s when I was a kid and the 1970s when I was coming of age.  Most parcel deliveries to homes, at that time, were handled by the USPS.  They delivered to each and every house six days a week.  Sure, there was a rare UPS or, even rarer, Railroad Express Agency delivery.  Mostly, it was the
USPS.  Food deliveries?  We had some.  We had a milk man, Twin Pines Dairy, that delivered every day and a bread man, Awrey’s, that delivered twice a week.  Other food deliveries were rare in my neighborhood and almost exclusively pizza.  The volume of packages was nothing like what we see today, but there were days when got parcels via the post office and food deliveries from both the milk and bread men.  So, that counts as multiple deliveries.

Grocery stores killed the milk and bread/baked goods delivery business.  With grocery stores, the food industry was very efficient in getting the good to within a mile of where you lived (assuming you lived in well populated urban or suburban area), it was then your job to go to the store, select your products from the shelves, pay for them, and then tote them home. 

When the internet burst onto the scene, everyone assumed that we would be able to order online and get groceries delivered to our homes for less than it cost to go and buy them from the grocery store.  How naïve we were.  The grocery store would have to have people walk the aisles, make the selections, pack and load a vehicle, and then drive and deliver them to your house.  How could that possibly cost less?  It didn’t.

Well, Amazon figured out a way.  Most grocery chains had regional warehouses and local stores.  The warehouses were designed of getting goods in full tractor-trailer truckloads, storing the goods, and shipping full truckloads, on pallets, to the local stores.  Amazon eliminated the local stores and reconfigured the warehouses to facilitate picking individual customer orders.  It was a classic elimination of the middleman strategy that generated savings.  The made shipments using USPS, UPS, and FedEx which took a few days. 

This worked perfectly for, well, books which is where Amazon got started. Over the years, Amazon added more and more goods and built more and more warehouses.  As their business grew, they added more products to the mix.  The increase in the number of warehouses in densely populated areas allowed them to cut delivery times.  They set goals of one day and then same day deliveries.  If they could do this, they would be a serious threat to pharmacies and grocery stores.  This pandemic has accelerated their progress to do this in the largest cities around the country.

At the same time, they have brought the delivery business in-house.  They have invested in delivery vans and even adopted a Uber like model for independent drivers to get in on the action.  As a result, they use UPS and USPS substantially less than they did just a few years ago.  They used to use FedEx, but no longer.  They got a ‘divorce’ and FedEx has dedicated themselves to working with anyone who competes with Amazon.

So, my question is this.  Why did the USPS and the milk man pass by our house once a day and the bread man twice a week but Amazon is zig-zagging all over our neighborhood all day long making separate runs even to the same house on the same day?  The USPS and milk/bread men had routes they followed.  You would think that route model would be less costly than Amazon parcel focused model.  But I am not so sure.

First, I am certain Amazon’s aim is to shave delivery time.  They want to be so convenient that going to the store is so… well… inconvenient by comparison.  For many products, that is certainly the case already.  Secondly, if Amazon is doing it this way right now with multiple deliveries a day on my street, I have to assume their systems and algorithms have provided the lowest cost model given the short and mid-term goals in this regard. 

We have to remember that in the days of yore there was no computers to support the creation of real time dispatches and real time routing optimizations.  The route model of the milk and bread men was probably the best heuristic delivery management model around.

I just wonder, if I start getting perishables from Amazon if I will have to put the modern equivalent of a milk chute in my house?