Daily Dose of iQ: Amazon Considers Delivery by Taxi

Nov 07, 2014 — Collin Prior

Mashable reported yesterday (Nov. 6) that Amazon is testing taxi cabs to deliver packages to customers in L.A. and San Francisco.

"Under the program, Amazon paid Flywheel (a taxi-hailing app) cabbies about $5 per package and loaded the cars with as many as 10 packages bound for a single ZIP code," wrote Mashable's Todd Wasserman.

This program would only work in cities with high population density.

This could be cost effective in high density neighbourhoods in cities like New York and London. Taxis have an advantage already in that they already exist in areas with high congestion -- they have designated taxi stopping areas and they are located all over. Cabs also have times in the day that are quieter than others, so they may be able to arrange deliveries around their normal cab fares.  

If taxis were able to pick up from a central distribution point and go to a single ZIP code with a number of packages, it could make the trip well worth it. In buildings that have concierges, this would be very easy as the taxi could pull up out front and simply drop off the parcel in the foyer. This could also be extremely effective for late or after-hours deliveres. Say, I am a consumer and would like to get a package after 8 p.m. because that is when I get home from work. Having taxis, which operate 24 hours a day, make that delivery that would be great for me.

Heck, if Amazon let me drop off a few small packages each day on foot (and paid me $5 per), on my way home, I would do it.

Conversely, this model is not so feasible in smaller centers or suburbs where taxis would have to go out of their way to deliver something. This is not feasible in locations where the cab driver could be making more money finding a regular fare during the same time.

I could see taxi companies serving Amazon based on areas of a city where they are willing to deliver to.  At $5 a package, this seems like a reasonable rate for Amazon to afford especially at busy times of the year like Christmas when courier companies get overwhelmed. If you can get enough packages in convenient locations, this becomes with it for the cabbie. Heck, if Amazon could let me pick up a couple small packages each day from my office building and drop them off to buildings with a concierge on my way home, I would do it.

If Amazon can harness a vast network of available vehicles to increase output and revenue, why not?

I think the hardest part of using this method as a service is the logistical nightmare of organizing packages, given companies that do not currently operate in this space. Even things like insurance and who is responsible for the package need to be considered.

I am not saying this is a foolproof solution, but when you think of it, you have a vast network of vehicles already on the road that routinely make trips all over major cities. If you can harness the extra capacity and increase output and revenue, why not?

Topics: Retail Operations, Wireless Trends, Mobile Industry, e-Commerce

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