Here’s How Amazon Could Benefit From The Launch of Instant Pickup

Amazon’s (NASDAQ:AMZN) razor sharp focus on convenience and speed of delivery has led to yet another innovative offering by the company, this time called Instant Pickup. Launched earlier this week, Instant Pickup allows Prime members and Prime Student members to pick up essential items ordered online immediately from specific locations. The company states that these pickups can be completed in two minutes or less, and will be available at staffed locations in self-service lockers. Currently, the items available under this service include snacks, electronics and Amazon devices such as Fire TV and Echo. It is not clear whether the company will add more items to this list, and for now it appears that this service is aimed towards competing better with convenience stores and attracting customers (especially students) to shop for daily needs via Amazon. The company is working overtime to merge the convenience of online shopping with the benefits of offline shopping (such as touch and feel and immediate availability), especially as it looks to expand into the grocery segment. The company will likely use Instant Pickup as a tool to drive Prime memberships, which are a key revenue driver for the company. We believe the key benefit of this service for Amazon will be enticing customers to use its platform for buying daily essentials and perishables, in addition to the products it is more often used for currently. Further, if the company expands the items available under this service, Instant Pickup could attract more customers who would otherwise shop at brick and mortar stores due to immediate needs.

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Competing Effectively With Brick and Mortar Retailers

Amazon’s Instant Pickup is being compared to vending machines in some respects, as vending machines offer snacks and other items quickly for for immediate consumption. However, Amazon’s price benefit and the ability to order products via a smartphone (and an Amazon account) give this service an edge over vending machines and convenience stores. Further, the inclusion of electronics and other items can increase the ticket size of transactions and drive revenues for the company. One of the key advantages offline retailers have over online players is the ability to serve customers immediately, and no waiting time to get the product. With Instant Pickup, Amazon is looking to further bridge this important gap between online and offline players. This could also be the company’s way to reach out to customers to shop for snacks on its platform as it looks to expand its grocery business following the acquisition of Whole Foods.

We believe Instant Pickup can help Amazon entice customers to shop more frequently for essential items and perishables using its platform, as opposed to currently being the go-to place for more durable items. This feature should encourage users to use its platform for some grocery requirements, which is important as the grocery business is likely to be the next major growth driver for the company. Adding electronics to the list of items available for Instant Pickup can also drive revenues and profitability, as it makes it even easier and more convenient to buy popular Amazon products.

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