Where Amazon Will Go Next

The other day Amazon’s Jeff Bezos admitted Amazon makes no money from the Kindle itself. That’s not as bad as it sounds. Jeff Bezos is referring to the hardware. Amazon sells content for the Kindle and that can make money. This is akin to shipping at cost and making money off the product you sell.

The Kindle isn’t a product, it’s a delivery method.

This however has me thinking. Jeff Bezos is a bright guy, and Amazon is a clever company who is constantly innovating. It’s pretty clear Amazon is looking to expand its warehouses to more locations to cut down on delivery time and perhaps even offer same day delivery in many places. It seems quite possible however that Amazon’s Lab 126 may have another trick up it’s sleeve for the (substantially) longer term: 3D printing. If Amazon can manage to create an ecosystem where products can be printed on demand, it can turn anything into eBook. Sold and delivered through their ecosystem. Simplistic items first and perhaps eventually more complicated items.

That’s not to say expect Amazon to sell 3D printers tomorrow. We’re talking years most likely. However it would be the ultimate delivery method for applicable goods.

Engineering Efficiency

Internet companies have the unique ability to scale quicker than any other industry on earth. Never before has a company been able to position itself from being nothing more than an idea to being in the living rooms of millions around the globe in a matter of hours. While this introduces seemingly unlimited opportunities to grow it also allows for exponential waste if a company isn’t careful. It’s interesting to see how they scale. Scaling businesses in many ways isn’t very different than scaling servers and software stacks.

The Classic Example: UPS

Started in 1907 and adopting the name United Parcel Service in 1919 UPS has no real “high tech” background unless you include the Ford Model T. That doesn’t mean it couldn’t become more efficient. UPS has made a science of the delivery business. For example it’s famous for it’s “no left” policy. Simply put they found that avoiding left turns means less time waiting at lights which means less fuel is wasted. The more efficient routing formerly done by humans now computerized saves them 3 million gallons of fuel in 2007 alone. Lets do the math:

Assuming they run 100% diesel at an average cost of $2.87/gallon in 2007 [doe] multiplied by 3 million that’s $8.61 million dollars by trying to avoid left turns.

Not bad for a souped up mapping application.

By having their drivers do things like turning of the ignition while unbuckling their seat belt at the same time, and scanning for the doorbell while walking towards the door (it’s easier to see from a distance than up close) they can shave time off of their routes.

Then of course there’s package tracking. While customers might like to know in what city their weight loss taps are sitting tracking systems help reduce loss and monitor package routing for optimal efficiency.

Cutting Utility Bills: Google

Being the largest search engine, a large ad network, email provider, analytics firm, mapping service, video site, and whatever else they do means Google needs a ton of servers. Cramming servers into data centers and keeping them cool to prevent hardware failures is a complicated and expensive task. Keeping the whole thing powered is also really expensive. Google has scrutinized server designs to eliminate all waste possible. This has resulted in Google having more horsepower at a lower cost than their competitors. Having more capacity at a lower cost means Google can do more at a lower cost than their competitors. I won’t discuss Google in too much detail since they did a great job themselves recently and I mentioned it the other day in another blog post: Google’s Data Center Secrets.

Shipping Efficiency: Amazon

Amazon’s long been improving efficiency by using data collection and analysis to encouraging their customers to spend more. Their algorithms to recommend related products you might be interested in is one of the best out there. Their ordering system is streamlined to prevent customers from bailing before completion. Their products are SEO’d to appear on the top of Google searches. That doesn’t mean Amazon can’t improve other parts of their business.

Amazon several months ago started a Frustration-Free Packaging program. Here’s how they describe it:

The Frustration-Free Package (on the left) is recyclable and comes without excess packaging materials such as hard plastic clamshell casings, plastic bindings, and wire ties. It’s designed to be opened without the use of a box cutter or knife and will protect your product just as well as traditional packaging (on the right). Products with Frustration-Free Packaging can frequently be shipped in their own boxes, without an additional shipping box.

The key here is “can frequently be shipped in their own boxes”. By shipping a box alone rather than packaging they can skip a step in their warehouses (and the packaging materials that go with packaging something for delivery). This also lowers the weight as those extra boxes don’t weigh 0 oz. The frustration free packaging is also the perfect shape for efficiently filling trucks and strong enough to not crush easily thus lowering returns due to damage.

Amazon now even has a feedback form [login required] for users to share what they think of their package. This has the added bonus of helping further reduce the inefficient shipping practices so common right now.

Amazon’s also done a significant amount of work on their infrastructure to make their servers scale well using tech such as EC2 and S3. By selling capacity to other companies they able to take advantage of economy of scale as well as diversify their business beyond just retail. Of course they are planning their data centers to have access to cheap power.

These aren’t haphazard attempts at increasing efficiency, these are well calculated engineered approaches to removing even the smallest inefficiencies with the knowledge of how they compound as operations scale. Aren’t they clever?

How To Build A Good Order/Shipment Notification Email

I buy a decent amount of stuff online, both physical goods and services from various vendors. It amazes me how few get the order confirmation and shipment notification emails right. Most companies do a downright awful job.

Order Confirmation

Order confirmations should be sent shortly after an order has been sent and the credit card has been accepted. It should contain the following information:

  • Order # – This should be in the subject as well as the body. Obvious.
  • Sanitized payment information – The last 4 digits of your credit card should be included, or other billing information.
  • Itemized order list – Each item, description, quantity, stock status (or est. date) should be listed in a table.
  • Shipping Address – Where is my stuff going?
  • Shipping Method – USPS? UPS? FedEx? Overnight? Ground?
  • Estimated ship date – If different things have a different shipping date, it should be per item, otherwise one date specified.
  • Contact Information – Email address, link to contact form, phone number to get in touch with store

Shipment Notification

A shipment notification should be sent for each day something ships. All shipments from all warehouses should appear in 1 email. For example if I order 3 things and it ships from 3 warehouses on 1 day, I expect 1 email. If I order 3 things and it ships over 2 days from any number of warehouses I expect 2 emails, one each day. If there is more than one package, I expect each to be listed in the email.

The email should contain the following:

  • Order # – Again, obvious
  • For each package it should tell me:
    • Delivery Address – Where is this package going?
    • Shipment Method – How the item is being mail (USPS, UPS, FedEx, overnight, ground etc.).
    • Estimated Arrival – When is this package expected to arrive?
    • Tracking Number – Tracking number to track package, there should be a direct link to shipper to track package NOT a page that requires you to login first. Most stores mess this up. I shouldn’t need to login. I just want the number. (Pro Tip: search Google with your tracking number for an quick direct link to the tracking status page).
    • Inventory – What is in this package? Should be an itemized list with quantity.
  • Contact Information – Email address, link to contact form, phone number to get in touch with store

It makes things so much easier the closer companies get to following this. Most companies get about 80% of the list, only a select few get this done correctly 100% of the time. The closest I’ve seen to date is ThinkGeek who has been pretty close to perfect every time I order.

Tracking Packages With RSS

What will it take for USPS, FedEx, DHL, and the USPS to offer RSS feeds to track packages. It seems like such a natural idea. Yet none have implemented the feature themselves. It appears the USPS is trying to modernize their image, but still no RSS tracking of packages.

There are several third party sites out there that do this, but to me that’s just asking for trouble since:

  1. What are they doing with my info? Is this really secure to use a stranger as a middle man?
  2. Screen scraping can be unreliable and break. I like reliability.

It’s not that complicated to build, it’s essentially a different template on an existing system. I’d bet they even have it since many large retailers show tracking info within their order status pages. They just don’t make it available to consumers.

Am I really the only one who wants this?

When Shipping Costs More Than The Product

Shipping is more than the costSo I needed a longer USB cable. Newegg.com to the rescue. Found a nice generic brand cable with good reviews (they tend to be every bit as good as the 24K gold, diamond encrusted name brand cables you can buy at certain electronics stores). The irony of it all is that the shipping is just a few cents shy of being more than the cable. Still cheaper than going to the store, but silly it costs so much.

Is this a complaint? No not really, shipping isn’t free, I know that. And it’s not the sony screw incident, but it’s still odd.