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Further thoughts about the effects of technology and how online retailers in general and Amazon in particular have revolutionised shopping.

Royal Mail Group recently announced a quite dramatic shift in their fortunes and prospects. They will invest £75m in Parcelforce Worldwide as parcel delivery gets a major boost from online companies and 1000 new jobs are set to be created at the same time.

This is in stark contrast to gloomy news over the past few years. 4000 staff laid off last year; letter volumes down 25% since 2005 and predicted to drop at least 5% a year from now on – these have been the expected stories.

Parcels Are the New Gold

Now, they are modernising the set up quite radically. The Coventry parcel hub will be expanded and joined by new centres in Lancashire, Cornwall and Hampshire. Another nine centres will be expanded or moved. The entire IT systems will be updated.

Chief Executive Moya Greene said that the burgeoning rise in parcels was an opportunity to grow profitable business. Online retailing is expected to account for at least 13% of GDP in four years time, and Royal Mail are positioning themselves in pole position in that revenue stream. The key is efficiency driven by reliable high-power technology.

People don’t just want their goods posted to them, they want them as quickly as possible. The express market alone is already worth almost £6 billion a year.

Amazon at Forefront of Market

Last year, 99.9% of parcels from Amazon were delivered on time for Christmas. Apparently, CEO Jeff Bezos thinks there is ‘room for improvement!’

Getting out three million gifts in a night (without flying reindeer) is down to ‘organisation’. One truck leaves the warehouse in less than three minutes, round the clock; or 35 Christmas orders per second in the festive run up.

Allan Lyall of Amazon Europe explained to Jessica Salter of the Telegraph Magazine as they toured the 5550,000 square feet of ‘fulfilment centre’ near Milton Keynes, that they expect to take on 10,000 extra workers this Christmas around the country.

Most will join the regular employees in the miles of conveyor belts, racks and stacks that describe the modern day Santa’s grotto filled with elves.

Controversial But Always Impressive

Still in the spotlight over not paying ‘enough’ British businesses taxes, as they regard the UK subsidiary as ‘a service company’, and still in the slipstream of endless debates about internet shopping wiping out traditional high street book and music shops, Amazon continues to flourish and exploit its market leading status.

One click shopping, ease of dispatch and relative ease of returns and product reviews from real users, have led Amazon to become a natural retailing experience, part of the language and culture of shopping in Britain, according to Jessica Salter.

They started the deals in late November and anticipated ‘Cyber Monday’ which fell on 3 December to break all previous records. Their own Kindle, Michael Buble’s Christmas CD and Harry Potter DVDs topped the bestsellers. Other favourites with clickers are the reborn Furby toy, the game Bananagrams and Cliff Richard’s calendar.

Salter witnessed how incoming goods are scanned and logged, filed into receiving stations and checked for defects. Some products like the racy novel Fifty Shades of Grey ‘sell so quickly, there is no point in shelving them’. These items go straight to ‘mass land’, ready for rapid transit out.

Pickers collect orders at the command of hand-held scanners in order best to hit the five postal collection times during each day and night.

While keeping quiet about the details of the algorithms that underpin the whole massive operation, Lyall told Salter, proudly: ‘it’s all integrated, end to end, and it’s home-grown software’. If they find a better way of doing it, that can be rolled out across the world overnight.

Amazon declared war on waste, resources, energy and time. A split second delay of a website page loading has a huge knock-on down the line. Customers must get their parcels on time. Even snow delays are factored in to reduce time loss as far as possible.

Lyall summed it all up finally, and thereby explained why they are so successful today and why the Amazon Christmas looks set to stay and grow for years ahead: ‘You need to be organised and you need to be efficient’.

Related articles:

Hidden Charges Are the Sting in the Tail of Online Shopping, 4 December 2012

Getting the Christmas Shopping All Wrapped Up, 26 October 2011

Image: Steve Jervetson