It’s no secret that I’m an Amazon.com junkie. Prime was the crack that lured me in; Prime and the fundamentally cloistered life working out of the house or on the road leads me, as well. I don’t have any daily travel pattern that would allow me to “pick up some [fill in the blank] at the store. ” Amazon.com has been easy, quick and I assume the prices are “close enough. ” I wouldn’t call myself a really loyal or savvy shopper, just a lazy one, happy with dependable results.

Still, I can’t ignore what I know as a retailer, and I know several things about Amazon.com.

• The company has not been very profitable, with earnings declining even as revenue continues to rise
• Amazon.com has raised the price of its Prime offering. After speculation that it would be raised from $79 to $129, it announced an increase to $99. This number felt palatable to me, at least. Everyone is entitled to make a buck. I might not have felt the same about $129.
• The company has reduced the number of items that are straight “Prime ” offerings and made them add-on items. That means the shopper has to hit a hurdle in one order for those items to also be shipped free. Over the past three months, it has seemed to me that the number of add-on items was rising.
• The company really ships a lot of half-empty boxes. In industry parlance, it ships a lot of air. And most retailers consider shipping air a big no-no. I’ve made that observation on these pages before, and even commented on it to the company when asked to “provide packaging feedback. “

Knowing the above, it is only logical to assume that the company is working to bolster the bottom line. Increasing the number of add-on items should be partly designed to increase average order size, and consequently make shipping far more economical: shipping less air and larger consolidated orders.

Well, that all sounds good, but it seems that those front-end changes have just not translated into any kind of shipping economies at all.

Last week I was asked by a friend to order replacement kitchen brush heads for her. They were add-on items, so I wracked my brain for other items I might need in the near term to get past the shipping minimums. It took a while – I was surprised how many items I remembered as Prime that were now add-ons – but eventually I got there. The order consisted of 2 sets of replacement brush-heads (I got a set for myself too), a soap dish, 2 packages of paper guest hand towels, some hand cream and a drain board for my kitchen sink.

It turned out that I received this order in three different packages over two days. Now in fact, Amazon did not achieve the promised two day shipping window on the second set of packages, but I wasn’t in a hurry, so that wasn’t the issue. The issue was the somewhat astounding size of the boxes. The drain board was in a large box all on its own. One of the packages of hand towels was delivered in a small envelope while the other was boxed with the remaining items on the order and a lot of air cushions.

As a consumer I observed that I had a lot of corrugated to break down and put into recycling bins: they actually filled up my bin. It’s happening often enough that I’m getting vaguely annoyed. As a retailer I had to ask myself…what the heck were they doing? All the work the company had done on the front end was completely undone on the back end. They might as well have just let me order it all separately. None of the sales were particularly incremental. I might have altered my buying pattern slightly, but I was pantry-packing bathroom hand towels for the privilege of Prime shipping. I might have put off the dish drain for another week or so, but it was coming anyway.

Frequent readers of RSR’s work will know we don’t advocate expense reduction as a tool for sustainable business success. But that doesn’t mean we shouldn’t mind our dollars and cents. Shipping a box of air with a dish drain inside is just bad shipping policy, no matter how low the rate. We wonder if one reason Amazon.com is experimenting with its own delivery vans in a few cities to reduce that rate even further. If so, the company’s taking the long way round solving what should be a relatively simple problem – order consolidation.

Back in the early 90’s I used to implement sortation systems that helped bring work to the worker, rather than bringing the worker to the work. They also served to consolidate shipments nicely. That was more than 20 years ago, and it worked really well. I can’t understand really, why it’s so hard for Amazon.com to do today.

Whatever the reason, it’s clear Amazon is leaving some real money on the table. And honestly, if it tries to kill that problem by raising the Prime fee another $20, it may well force me, at least, into some new buying patterns. I know thinking about drone delivery is fun and gave the company some great PR. But PR isn’t going to put money in anyone’s pockets. And as far as I can see, the technology required to accomplish this has been around for…well…more than 25 years.

This is the long way round saying that retailers who mind their knitting and continue honing their basic business processes will find themselves doing well, and those who don’t will find themselves lagging. Amazon is not the worst threat in our worlds – retailers’ fear of Amazon might be, but the reality is very different. Amazon seems challenged these days. Now is the time to find a new trigger…one that allows for higher customer service at reasonable prices. The market is more open than we think. And the savviest company may well win!