Revisiting the heyday of department stores and five-and-dimes

Amazon launches one-hour delivery service in Baltimore

Amazon just launched Prime Now in Baltimore will launch its one-hour delivery service, Prime Now, in the coming weeks in some parts of Baltimore, taking advantage of the pending opening of its massive new distribution center near Canton.

The service will be available in select zip codes to Amazon Prime subscribers, who pay $99 a year for unlimited free two-day delivery on more than 20 million items. The one-hour service, available through the Prime Now mobile app, costs $7.99, while two-hour delivery will be free.

The Seattle-based online retailer's announcement Thursday makes Baltimore and Miami the second and third cities to get the rapid delivery service — it launched one-hour delivery in New York City's Manhattan in December and expanded to Brooklyn last month. And it came the same day that the Federal Aviation Administration opened the door to Amazon founder Jeff Bezos' dream of unmanned drone deliveries by issuing an "experimental airworthiness certificate" to allow limited testing of the plan.

Both initiatives promise to transform traditional retail, potentially threatening brick-and-mortar stores, while offering consumers more options for immediate satisfaction.

Amazon Prime's success has blown away the company's projections and "petrified" local and national retailers, said Howard Davidowitz, chairman of Davidowitz & Associates, a national retail consulting and investment banking firm headquartered in New York City.

"If you're a retailer and you're not scared of Amazon ... you should be," he said. "They are the change agent. They are leading the change in retail."

Davidowitz expects the Prime Now program to catch on rapidly in Baltimore the way it has in New York.

The service is made possible by the state-of-the-art fulfillment technology in Amazon's new 1 million-square-foot distribution center in Southeast Baltimore, at the site of the former General Motors plant on Broening Highway and a short drive from much of the city.

That facility will open in the next couple of weeks, said Amazon spokeswoman Kelly Cheeseman.

One-hour delivery follows the expansion of Amazon's "Get It Today" same-day delivery service to the city in 2014.

Cheeseman said Prime Now will expand to more zip codes in Baltimore eventually. The company also said it will continue to roll out the one-hour service to more cities this year.

Customers can order tens of thousands of items through Prime Now, but they're mostly smaller things, "daily essentials" such as household cleaning supplies, snacks, pet food, bottled water, diapers and some items that can be given as gifts, Cheeseman said.

Prime membership's appeal is based on the company's reputation for convenient and inexpensive delivery with a seemingly endless inventory, Davidowitz said.

Darrell DeConge, 28, of Pikesville said he regularly shops on Amazon for books that are hard to find at local bookstores.

"I would absolutely use it. It's a really cool concept," he said Thursday afternoon.

Kaitlyn Jones, 23, and Jessica Mercer, 31, roommates who were shopping at Canton Crossing on Thursday afternoon, said they'd be interested in one-hour shipping.

Jones, who owns a makeup business, said the speedy shipping would be useful for supplies she buys regularly on Amazon like brushes, which she can get online for less money.

Mercer, a photographer, said she buys lots of camera equipment on Amazon because she can find better prices and selection. She said she once went to Target for a new tripod she would've normally bought on Amazon because she needed it quickly.

But both women said they'd be unlikely to buy personal items like paper towels on Amazon, even with the new shipping option, because there are other options in their neighborhood.

Other local consumers seemed less interested.

Cynthia Shey, 43, said one-hour shipping, is "something that intrigues me, but I don't think I'd use it."

"It's sort of beyond my expectations," she added, saying she uses Amazon for some purchases, mostly toys for her 5- and 7-year-old. But the Baltimore resident said she prefers to buy local, and for items she needs right away, she can just head to the nearby CVS.

"I can just go get it," said Shey as she shopped Thursday on the Avenue in Hampden, looking for items for Easter baskets.

Ted Bauer, a 69-year-old retired information technology systems engineer from Hampden, said he's already pleased with standard shipping and he doesn't order enough items on Amazon to warrant paying the addition Prime subscription fee.

Bauer thinks the concept would be popular for some who shop for everything on Amazon. But for those must-have essentials, he said he can easily walk to the nearby Giant on 41st Street.

"I use it for things that I can't find in the local store," he said. "I don't think I would use it for daily consumption."

Deirdre Bryan, 44, of Remington, said she doesn't shop on Amazon much but said her daughter, a 24-year-old student at Morgan State University, would definitely enjoy the fast shipping.

"I know she would, knowing her impatience," said Bryan, while walking through Hampden on Thursday.

Consumer and retail experts don't expect such traditional sentiments to last long.

Online shopping drove many brick-and-mortar electronics stores out of business, and Amazon is taking the next step with everyday durable goods, said Auburn Bell, an affiliate professor of marketing at Loyola University Maryland.

"If I can sit at my desk and I can realize I need paper towels, cereal, toothpaste and shaving cream, do I want to make a stop on the way home or can I go online, like I do for anything else these days?" he said.

Bell said Prime Now is an direct appeal to younger shoppers.

"It's a pointed way to engage millennials and generations Y and X, moving beyond the typical online purchase," he said. "It's totally convenience-driven."

The service is another way for Amazon to distinguish itself in the crowded online retail market, according to a Zacks Equity Research report issued in February.

"To be a formidable player in this space, Amazon must constantly give excellent services," the report said. "Prime Now will be part of an enhanced delivery strategy — an important part of Amazon's growth."

Zacks noted the one- and two-hour delivery service also could drive membership gains in Amazon's Prime subscription service, which also includes access to its video library.

Between 20 percent and 25 percent of all U.S. households — between 30 million and 40 million — were Prime subscribers by the end of 2014, and that is expected to rise to roughly half of all homes in the country by 2020, according to a February report by Macquarie Research, an arm of the Macquarie international investment firm.

While the FAA now will allow Amazon to begin experimenting with drone delivery, don't expect a drone to drop a load of diapers on a Baltimore stoop anytime soon. The permit is extremely limited.

All flights must be conducted at no more than 400 feet, during daylight hours in clear weather, and within sight of the pilot and an observer, the FAA said in a statement. Amazon will be required to report monthly data to the regulator including any malfunctions.

While less restrictions on drones likely would extend the reach of one-hour delivery by eliminating road limitations such as red lights and traffic problems, Prime Now alone will be troublesome enough for local retailers.

Davidowitz said retailers must distinguish themselves by maneuvering into markets Amazon doesn't serve.

"You've got to decide what special things can you do," he said. "You can call customers. Amazon doesn't do that. ... You've got to determine what services can you offer that others, including Amazon, can't."

The effect on the retail market will be consistent wherever Amazon expands Prime Now, Bell said.

"Whether it's Baltimore, New York or Miami, ultimately it's going to be taking dollars out of the local retailers," he said. "It's going to shift those dollars from local businesses to the mega online retailers."

Baltimore Sun reporter Arthur Hirsch contributed to this article.

Availability of Amazon's Prime Now service

The one- and two-hour delivery services will be available in the following Baltimore zip codes:

21202, 21218, 21224, 21231, 21205, 21222, 21213, 21233, 21230, 21206, 21203, 21214, 21211, 21251, 21201, 21223, 21225, 21226, 21217, 21219, 21237, 21229, 21227, 21216 and 21236


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