Last Mile Deliveries #2: Keys to your house

The Amazon Cloud Cam and compatible locks. Photo Credit: Becca Farsace / The Verge

Amazon has just released Amazon Key to Amazon Prime members. (I am not an Amazon affiliate, i.e., I derive no financial interest from the link). Amazon Key is a product-service bundle that includes buying an indoor security camera, and a compatible (electronic) smart lock on your door (totaling $250). Hardware is not dead yet. See detailed coverage at Verge.

How does the Amazon Key delivery work?

Amazon authorizes the delivery, then turns on the security camera, and unlocks the customer’s door. The customer will get a confirmation (via email/text) that his or her package was delivered. Customers can watch the delivery live or later through a recorded video. Customers can also arrange to allow other people (pet sitters, housekeepers, etc.) through Amazon Key.

Popular Press Coverage

Press coverage has been relatively cool. A critical article titled Amazon Key is Silicon Valley at its most out-of-touch by Christine Emba on Washington Post pulls no punches.

• It is natural to wonder about Bezos’s reaction to the critical article on Amazon in a newspaper that he owns (although, Bezos has never been known to comment on any coverage). But WaPo Executive Editor Marty Baron (who was portrayed by Liev Schreiber in the Oscar-winning Spotlight) talks about Bezos not getting involved in WaPo’s coverage.  Likewise, Bezos did not comment on an earlier such article (Is Amazon Getting Too Big? by Steve Pearlstein) on Amazon’s burgeoning monopoly.
• Amazon is based in Seattle but often included in Silicon Valley firms, as Amazon is often thought of as a Tech company more than Retail. Amazon is really both (I’d argue more retail than tech, under an expansive definition of retail). One of the reasons behind Amazon’s distinctive work culture is that it is not based in the Silicon Valley geographic ecosystem.

I recently met an Amazon Prime customer (not an Amazon employee) on the OIDD 680 plant trip to Seattle, who got Amazon Key for his house on the very first weekend and likes the idea so far.

However, Lifehacker argues for waiting to get your Amazon Key based on two reasons: clunkiness of Smart keys (i.e., security flaws) and privacy concerns aligned with Cloud Cams.  Privacy concerns are important, but I think Google Home and Amazon Alexa are likely “deeper” invaders of privacy for far less utility than Cloud Cam key. This is a larger topic that I would like to flesh out later, but I wanted to focus on and highlight three Operational issues.

1. Supply Demand Mismatch

A challenge for last-mile fast deliveries is the difficulty of meeting customer time windows, especially for Same Day Delivery. How can deliveries be made today between 2-4 pm? I won’t be at home – how can the item be delivered?) I wrote about this window issue earlier in my last post, Last-Mile Deliveries #1. Amazon Key solves the delivery in the service window issue by expanding the available time window of delivery (compared to renting boxes in apartments, which works more like consignment).

Furthermore, from Amazon’s perspective, a customer having the Amazon Key service closes a service gap that occurs, when the customer is not around. (Having a delivery box installed on your porch also addresses much of this gap much more economically). I think that the stats on “lost” packages/damages to packets at the doorstep and on the last mile, must make it worthy for Amazon to test the $250 setup cost for customers.

2. How to Fix Service Failures?

Currently, Amazon Key is not integrated (see FAQs) with existent Security alarm systems. If you (as a customer) have a security alarm system installed in your house, then on delivery days you have to disable the security alarm system. It is very possible that such a  requirement may violate some precepts of the contract with your home insurance company. If a rogue delivery ignores your camera and causes damage, then I am unclear as to how this service failure would be handled between Amazon and the customer.

This leads to a concept I now address as,

3. Trust-in-Service Path

One of the biggest value propositions of Amazon since its founding days is service guarantee — that delivery would arrive at doorstep when and as promised.  Amazon clearly moved the needle on two-day delivery service expectations, and through Amazon Prime, another expectation that such deliveries should be “free”.

However, recall that closing this Service Gap (Mostly Gap 4 in ServQual Gap)¹ took Amazon several years to build this now-normalized expectations and trust in Amazon’s Service.

This “Trust-in-Service Path” takes time, and often not a straight line.

As an example, think of Uber’s struggles with operationally addressing safety issues associated with “getting in cars with strangers” after they scaled. Uber could use established technologies such as GPS tracking to improve this Service Gap. But, what helped Uber, Lyft and other car-share services, was that the baseline experience was getting into a taxi essentially involved being driven by a driver whom you had never met before or likely to meet again, which had well-known structural issues (e.g., out-of-town tourists fleeced by taxi-meters, bad driver incentives due to 1-time interaction).

But in Amazon’s Key case, the baseline experience is “one’s home is one’s castle”. The default mode in homes is safety: no one but very trusted folks get into your home. So, any failure in a service that involves entering a home can be irreversibly salient.

Hence, a big service gap exists between even realizations and perceptions (ServQual Gap 5). It is unclear to me, how long it will take for the technology to bridge this “trust” gap.

Further References:

1. A conceptual model of service quality and its implications for future research by Parasuraman, Ziethaml, and Berry. Journal of Marketing. 1985.