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Amazon Strikes Deal With Landlords To Install Lockers In Apartment Buildings

Courtesy of ZeroHedge. View original post here.

Since the dawn of the e-commerce era, the largest US landlords have loudly complained about the crush of packages flooding mailrooms at apartment properties across the country.

One apartment owner went so far as to stop accepting packages altogether, while others have experimented with increasingly novel ways to process residents’ mail.

Now, Amazon is stepping in with a solution to a problem that it’s largely responsible for creating. WSJ is reporting that the e-commerce giant is partnering with some of the country’s largest landlords to install electronic lockers where delivery people can leave packages for residents, sparing building staff the tedious work of receiving, recording and distributing packages to residents – work that one landowner said was costing it $3.3 million a year in lost wages.

Amazon has signed contracts with apartment owners and managers representing more than 850,000 units across the U.S. to begin installing Amazon locker systems in their buildings, according to the landlords. Amazon has commitments to install the lockers in thousands of properties, many before the peak holiday shopping season, according to a person familiar with the matter.

Several of the nation’s largest operators, AvalonBay Communities Inc., Equity Residential, Greystar and Bozzuto Group, have signed up so far, company executives said.

Most of the Amazon’s partners plan to offer the lockers as free amenities for residents. They’re able to do this because the lockers will ultimately save building owners money. Amazon is charging a one-time fee of between $10,000 and $20,000 for the lockers.

Amazon is taking over the package rooms of some of the country’s largest apartment landlords, in a move that could help consolidate its control over how goods make it from the warehouse floor to the front door.

Amazon’s move, if successful, is likely to shift how the biggest apartment operators deal with packages toward a fully automated system that residents will be able to access 24 hours a day.

The locker program, dubbed Amazon Hub, will accept packages from all carriers and not just for purchases made on Amazon. They will be open only to residents, not the wider community. Residents will receive a notification when they have a package and a code allowing them to open one of the slots.

Apartment owners pay about $10,000 to $20,000 to purchase the lockers initially and don’t pay a monthly fee. Most landlords said they don’t plan to charge residents but to offer it as an amenity. They could also make back some of that cost in savings on staff labor.

While Amazon still harbors dreams of supplanting UPS and FedEx with a fleet of package-delivering drones, Amazon Hub represents the company’s attempt to solve one of the most vexing problems associated with e-commerce: The so-called ‘last mile’ – moving the package from a distribution hub to the customer’s doorstep.

The more stops a driver needs to make, the more expensive deliveries become. By allowing a driver to leave many packages in one place, Amazon can substantially reduce the cost of deliveries.

The most expensive leg of any delivery is the so-called last mile: getting a package to the doorstep. Amazon already has added lockers throughout the U.S., including announcing it is rolling them out at its newly acquired Whole Foods stores.

For Amazon—or any package carrier—it is all about density. The more places a driver has to stop and drop of a package, the more expensive the process. It also increases the likelihood of a stolen order if it is dropped off unsupervised.

So dropping off a load of packages in one spot, like a locker or apartment office, is a huge cost saver. And as apartment managers grow increasingly frustrated with more deliveries to take care of, lockers become more attractive.

While several of the world’s largest landowners have already started the process of installing Amazon Hub at their properties, there are still some problems that Amazon hasn’t accounted for, according to WSJ.

For example, building staff will still need to find alternative accommodations for large packages that don’t fit in lockers. Also, as e-commerce becomes increasingly popular, individual apartments may require larger lockers.

Amazon has designed lockers that can be placed both indoors and outdoors, which should make it easier for landlords to add more storage capacity, if needed. 

One issue for landlords has been that it is challenging to update lockers as demand grows and technology changes. Amazon will make lockers that can be placed both indoors and outdoors, making it easier for landlords to add lockers if the volume of packages that residents order exceeds the space they have in their mailrooms. The lockers will also have cellular connectivity so apartment owners don’t have to worry about running an Ethernet cable to them outdoors.

One problem Amazon hasn’t solved: oversize packages. Ms. Hollinger said Avalon has had to contend with deliveries including furniture to outfit an entire two-bedroom apartment, kayaks and even hub caps. No locker system can reasonably solve that problem.

“The package lockers are quite helpful, but the volume will be hard to sustain in the long term,” she said.

AvalonBay Communities, Greystar and Bozzuto Group – three of the largest apartment rental companies in the US – have signed up for Amazon Hub, and Bozzuto Group has already started the installation process. Amazon says it’s already planning to install lockers for 850,000 apartments. The company is in talks with other landlords, and expects to substantially expand the program next year.


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