Amazon Confidential

Amazon Locker Delivery: Experience Convenience

History:
Amazon Locker, launched in US and UK in September 2011, provides customers a secure and convenient option to receive Amazon packages at no extra cost. Customers dont need to be at home to receive packages; instead, they can pick up the packages at a time thats convenient to them. Besides being convenient to the customers, Lockers allow Amazon to consolidate parcels and negotiate a cheaper shipping rate with logistic partners and potentially pass on additional savings to customers.

Order Process1:
To place an order to any Locker, customers need to follow the following process: (1) Search for a Locker location using address / postal code / landmarks / city (2) Add the Locker to address book (3) While shopping, add the item to cart and then select Locker as the delivery address (4) Once the package is delivered to the Locker, customers are sent a pickup code which they can enter at the kiosk to retrieve the parcel within three business days.

Initial Response:
Since its cautious start in 2011, the Locker program has expanded to cover over ten metropolitan cities in US and more than two hundred postal codes in UK. The response from customers has been exhilarating, and the program continues to be showered with praise from multiple press sources2.

For more details, watch this YouTube video: http://www.youtube.com/watch?v=hXokiEofKpQ

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Fast Forward:
It is a bright autumn morning in 2013 and Gaurav Maurya, VP Transportation Solutions, is gazing outside the window and deciding on starting the Locker program in XYZ with five postal codes. These postal codes would be served from a single warehouse, and the expected daily volume is supposed to be 8,000 packages in the foreseeable future. Out of the 8,000 packages, half are expected to be for premium option3 and the other half are expected to be for standard option4. Gaurav has shortlisted five carriers for launching this service5. While selecting carriers to each postal code, he must also consider that any package not delivered on time typically results in concessions6 that are roughly ten times as expensive as the shipping cost per package. Gaurav is meeting the logistic partners this afternoon to finalize the negotiations and contracts, and must decide on the courier-postal code combinations.

Fast Forward 2.0:

It is now 2014, and Lockers have received similar appreciation from customers and press in XYZ. There are over 200 lockers in the five postal codes and most of them continue to do well7. Amazon is now considering launching lockers in the remaining postal codes, and must finalize the parameters to be used in order to select postal codes where lockers would be launched. Gaurav is meeting his boss in the afternoon to finalize the parameters and a list of locations. The conversation is also likely to include why some of the lockers are not doing as well as the others.

See Appendix 1 for feedback from customers and for links to articles from leading technology blogs and news sources. 3 Premium shipments take upto 2 business days to reach the five postal codes 4 Standard shipments take upto 5 business days to reach the five postal codes. 5 For a list of rates and typical delivery times, look at Appendix 2 6 Concessions refer to discounts / refunds / replacements etc. that Amazon gives to customers because of not matching up to customers expectations. 7 See Appendix 3 for a list of locker locations, trailing 5 weeks performance and a random record of ~7000 shipments
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Amazon Confidential Questions: (1) Looking at the rate cards provided in Appendix 2, help Gaurav select the best courier for each zip code, assuming the goal is to minimize total cost incurred while keeping customer experience in mind. Your answer should be in the format specified in Appendix 2

(2) Out of all the parameters listed in Appendix 4, help Gaurav select and rank top 5 parameters for finalizing locations where lockers could be launched and then explain your choices in less than 100 words8 (anything more than 100 words would automatically receive a zero for this question) (3) Looking at Appendix 3, could you help Gaurav understand why some of the lockers are not doing well? Please limit your answers to 150 words and to no more than 2 figures / graphs 9. (anything more than 150 words or 2 figures would automatically receive a zero for this question)

8 9

100 words do not include the five shortlisted parameters and special characters. Each figure can only have 1 diagram / 1 graph

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Amazon Confidential

Appendix 1: Customer Feedback and Press Coverage for Lockers

Customer Feedback: No complaints, I love that I don't have to worry whether or not items will fit into my tiny letterbox anymore. Now I feel I have more freedom, security, and peace of mind to shop online! Thanks Amazon :) I live in a high-burglary area so this is AWESOME! It was easier than I thought - many places to choose from and the store was open 24-hours. I didn't even need to "sign-in" at the locker; just the code made it a snap. Fantastic service. Items arrived much faster than they do for home delivery. Absolutely love it. No hassles picking it up from lockers Press Coverage (News articles and Blogs): Gizmodo (Link); Wired.com (Link);

Appendix 2: Carrier Rates and Delivery Time

Appendix2.xlsx

Appendix 3: Locker Performance Numbers

Appendix3.xlsx

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Amazon Confidential

Appendix 4: Parameters for Launching Lockers

1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. Population Density (postal code) Gender Ratio (postal code) Age Structure (postal code) Income Distribution (postal code) Unemployment Rate (postal code) Employment Profile (postal code) Vehicle Density (postal code) Order Volume (Average number of Orders received per day by Amazon from that postal code) Revenue (Average revenue generated per day by Amazon from that postal code) Prime Customer Ratio (Prime Customers/Total Amazon Customers in that postal code) Prime Order Ratio (Orders from Prime Customers /Total Number of Orders in that postal code) Corporate Tax Structure Labor cost Insurance Rate Crime Rate Carrier Density (Number of carriers servicing a postal code) Ship Charge (Average rate charged by a courier to deliver a package to that postal code) Rental Cost Public Transportation Infrastructure Distance from nearest Amazon warehouse Delivery Performance (Number of Successful Deliveries/Total Shipments) Ship-to-Deliver (Average time taken for delivering package to customer from nearest warehouse) 23. Package Size (Average size of a Package in cubic inches delivered to a postal code) 24. Location Hours 25. Building Type (Residential complex / Office building / Mall etc.)

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