Web-Based Sales Boost Local Deliveries

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Bilkays Express

Local distribution services are taking on greater significance for shippers as growth in online purchasing is forcing retailers and manufacturers alike to offer same-day service for deliveries and in-store pickup.

And signs point to more goods moving shorter distances at greater speed than ever before.

Internet retailer Amazon.com, with 2011 sales of $48 billion and growing 30% annually, is building a network of local fulfillment centers with the capability of providing next-day or same-day delivery to virtually every address in the United States.

Amazon Fulfillment already operates 34 centers spanning more than 20 million square feet and earlier this year paid $775 million in cash to acquire a company that makes automated forklifts. And in January 2009, Amazon acquired the remnants of Webvan.com, a grocery delivery service that attracted millions in investment dollars during the technology boom but which faltered after the dot.com bust in 2001. Amazon rebuilt the company and now delivers groceries to homes in Seattle under the name Amazon Fresh.

The surge in Web-based sales driven by Amazon and others has provided a lift for what for years has been called pool distribution. The term describes a service in which goods from many different shippers are “pooled” and delivered to customers in a local or regional market.

Some industry executives and investment analysts said retailers have no choice but to follow Amazon’s lead in providing consumers with same-day access to both goods and delivery services. And local shippers could reap the benefits.

“Shipping is not the customer’s problem — it’s the retailer’s problem,” said Jamie Nordstrom, executive vice president of the Seattle-based upscale department store chain that bears his family name, speaking at a conference for online retailers in September. “When same-day delivery moves widespread through Amazon, all other retailers will be expected to provide the same.”

He noted that Nordstrom introduced free shipping and returns last year. “Customers love free,” he said.

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© 2012, Transport Topics Publishing Group. All rights reserved.

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