Will Amazon kill FedEx?

  • By Devin Leonard, Spencer Soper, Nicholas Brautlecht, Richard Weiss and Carol Matlack
  • Published September 2016


The fear has spread to Wall Street, where analysts say investors worry about what Amazon's strategy means for the shipping industry. "The natural inclination among any observers of the market when they see Amazon is to be scared," says David Vernon, a Sanford C. Bernstein analyst who tracks the shipping market. "Amazon is the epitome of a zero-sum game."

How do you solve a problem like eCommerce?
According to a 2015 National Multifamily Housing Council (NMHC) renter preferences study, 72 percent of residents want a package delivery and holding area, so much so that they are willing to pay a premium for it.

"NMHC has done study after study on the topic and package management comes up as one of the most important amenities to residents every time," Barry Hume, president of Boston, Mass.-based Package Concierge says. "There's going to be a point in the not too distant future that it will become the most important amenity."

"Residents are ordering packages, and their expectation is that the packages will be delivered to their homes," Hume says. "Residents also believe it is our problem to deal with the packages, not theirs. As an industry, we need to figure out how tackle the problem."

Package Concierge raised $500,000 in equity funding in July. "These funds will provide a monumental boost to our research and development and lead technological innovation in package management," said Georgianna Oliver, CEO and founder.

Founded in 2012, Package Concierge works with some of the nation's largest real estate management companies: Alliance Residential, Avalon Bay Communities, Berkshire Property Advisors, The Bozzuto Group, Equity, Greystar, The JBG Com-panies, Pinnacle and Winn Residential.

One size does not fit all
The need for package lockers grows more complex with each new ecommerce model to hit the market. First, there's matching the right locker confirguraton to the right community type. A high-rise in Manhattan is likely a better fit for an indoor locker, whereas a garden community in Springfield, Mo., might be better suited for an outdoor, weather proofed product. Then, there are a variety of locker size and types, and innovations that evolve with every new model that comes to market.

With the growing popularity of Amazon Fresh, Blue Apron and other grocery and flower services, refrigerated lockers have become important to many residents who rely on online deliveries.

"The future of delivery is now," says Arik Levy, CEO of Luxer One. "Next year we will carry out a number of product expansions to meet the growth of the market. We expect to launch both refrigerator lockers to accommodate the growing demand for the delivery of perishables, as well as outdoor lockers that expand our product to apartment communities that need an exterior solution. This includes garden apartments, or those with exterior mail configurations."

Locker configuration and location are but two pieces of a delivery network that only grows more complicated. The Wall Street Journal recently reported that 30 percent of online purchases are returned, as compared to only 9 percent of brick and mortar stores. The changing dynamics of ecommerce are also creating new niches like package drop off, a value add for residents that can enhance a communities market competitiveness by saving residents valuable time at little to no investment to the community.

A number of package locker providers also offer on-site outbound shipping services. "Properties can now automate this with Luxer One's outbound shipping feature," said Levy. "Residents simply place a ready-to-send package in a locker compartment and follow the on-screen prompts to notify a local carrier to pick up the package." Levy says residents have loved the service because it saves them a trip to their local UPS or FedEx store.

With the largest merchants in the nation at work on the perfect infrastructure and logistics, the ability of multifamily communities to accommodate the ensuing river of packages will be not only critical, but imperative to the life of a resident. By any standard, the future is already here.