Amazon And The Postal Service Channel Conflict

Many are aware that working with a partner or group can create outstanding outcomes. This is true for Amazon and the U.S Postal Service. These two businesses have joined together to deliver groceries to customers and other businesses. A two-month trial was launched in August to deliver meat, dairy, produce and other groceries within the San Francisco area (Bensinger & Stevens, 2014). The goal for Amazon and the U.S Postal Service is to deliver groceries to customers in a more innovative, efficient, and quicker way in order to boost e-commerce and revenue. While trial was being conducted, both businesses had to battle with competitors like Wal-Mart Stores, Peapod LLC, and Instacart Inc. (Bensinger & Stevens, 2014). All of the competitors sell
fresh grocery or offer same and next-day service. If a customer want to buy groceries from Amazon, the customer has to go on AmazonFresh.com. Then, the customer can place an order of choice, and the U.S Postal Service will deliver the items to the customer’s home. AmazonFresh has over 500,000 items to choose from. It offers everything from groceries and paper towels, to books and video games (Bensinger & Stevens, 2014). Amazon and U.S Postal Service aim to deliver at scheduled times or during three-hour blocks. Also, the cost to deliver the items will be between $7.99 and $9.99; however, orders will be free starting at $100. Memberships and unlimited shipping will also be offered (Bensinger & Stevens, 2014).
Perspective of Amazon The collaboration between Amazon and the U.S Postal Service will benefit Amazon in many ways. One way it will benefit Amazon is by allowing Amazon to develop another way to sell directly to their final customers by establishing a new direct marketing channel.(How?) A direct marketing channel is when a manufacturer sells directly to final customers (Kotler, P. & Keller, K, 2012). Amazon does this by delivering the items at the doorsteps of the customers using facilitators. (What use in the past?) During the trial, the U.S Postal Service is the facilitator Amazon uses to deliver the groceries.
Another way the collaboration between Amazon and the U.S Postal Service will benefit Amazon is that it can help increase Amazon’s on-time delivery performance. On-time delivery occurs when items are delivered to customers at expected date and condition. Even with the best-quality products, most consumers will not be happy if their items are not on time, does not arrive, or damaged. However, consumers do like to receive their items very fast after they have placed an order and on time. Almost every city in the U.S has a U.S Postal Service nearby. This will allow Amazons’ customers who live in suburban areas to receive their groceries on the expected date. This will help raise Amazon’s on-time delivery performance and keep the customers happy. Even with the benefits the collaboration between Amazon and the U.S Postal service offers, there will also be some downfalls.
Amazon and the U.S Postal service can experience channel conflict. Channel conflict happens when a channel members’ actions prevent another channel member from achieving its goal (Kotler, P. & Keller, K, 2012). An example of this happening can be during the holiday season. Amazon’s goal during the holidays can be to offer next-day delivery until the night before Christmas. However, this can cause a problem if the U.S Postal Service decides to close on Christmas Eve or send its workers home early. This problem can hinder Amazon’s goal to deliver items to its customers on Christmas
day.
Another down fall that can happen is Amazon can dilute their brand by partnering with the U.S Postal Service. Dilution can occur by adding inappropriate channels to a company or business (Kotler, P. & Keller, K, 2012). Inappropriate channels can include channels that have a bad reputation or mission that is different from Amazon’s mission. Amazon wants to be known for delivering fresh groceries and high quality items. However, when customers think of the U.S Postal service, they do not associate it with high quality. This may affect how customers view Amazon’s groceries and items.
Perspective of U.S Postal Service The collaboration between Amazon and the U.S Postal Service will benefit the U.S postal service in many ways.
One way it will help benefit the U.S Postal Service is by increasing its value network. Value network is a system of partnerships and alliances that a firm creates to source, augment, and deliver its offerings (Kotler, P. & Keller, K, 2012). Amazon is a very well-known company that has been prospering since the company began. Partnering with Amazon may increase how the customer value the U.S Postal Service. This will cause customers to become more aware and attracted to the U.S Postal Service and they will start using their services more. The U.S Postal service can gain a lot of new customers in which this will help to increase its
revenue. Establishing long-term relationships with other companies can become beneficial in the future when a company may want to expand or have new ideas. The U.S Postal Service has not changed much in the past. The company has found its way of operating that has worked for many years. However, things are constantly changing. The collaboration between the U.S Postal Service and Amazon can be a start of a long-term relationship. It is possible that the U.S Postal Service may develop an idea that may be successful with the help of Amazon. Amazon can share its products or services, technologies, and techniques with the U.S. Postal Service that cannot be possible if both businesses do not have a long-term relationship. Unfortunately, the U.S. Postal Service can experience some problems while being involved with Amazon. Liability issues can occur while delivering the customers’ items like an item that was delivered damaged or to the wrong location. The U.S. Postal Service will be liable for the damage that may have occurred. The U.S. Postal Service may receive backlash from the customers and Amazon because both are upset. Also, there is a possibility that Amazon can send unreliable information that can cause more problem for to the U.S Postal Service. The best way to avoid those problems are for both company to develop a contract that states which company will be liable for specific problems. Conflict may occur through intermediaries’ dependence on the manufacturer (Kotler, P. & Keller, K, 2012). The U.S. Postal Service can become overly dependent on Amazon that it will be highly affected by any decision Amazon may make.