News at Smith

Amazon Lockers Turn Maryland Shoppers Yellow

Aug 04, 2016
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SMITH BRAIN TRUST — Walls of yellow lockers have popped up at Shoppers grocery outlets around Maryland, dwarfing the Redbox machines that customers have grown used to seeing near store entrances. The lockers belong to Amazon, which is giving the option of ordering online and then picking up in store. Amazon Locker customers can order smaller-sized shipments, generally weighing 10 pounds or less, and then wait for an email alert with a code to unlock the door once delivery has been made.

After launching the lockers in 2011 in just four U.S. cities, Amazon has gradually rolled out the service around the country, reaching Maryland in summer 2016 — mostly in Shoppers stores. Before that, the lockers showed up in 7-11 convenience stores in Washington, DC, and northern  Virginia.

Marketing professor Jie Zhang at the University of Maryland’s Robert H. Smith School of Business says the strategy helps address a key limitation of online retailing. "Consumers often have to wait for days for an order to arrive at home," she says. "Using the lockers can reduce delivery time, although Amazon doesn't make any guarantees in the United States like it does with Amazon Prime." (Customers in the United Kingdom can pay £1.99 for guaranteed one-day locker delivery.) Other selling points include the added security, if you have neighbors who like to steal packages from your doorstep. Making returns is also easier with the lockers.

Zhang says Amazon has been keen on the click-and-collect strategy. “But unlike a Best Buy or Walmart, it’s a pure-play e-tail, so it resorts to creative methods to overcome its lack of physical stores," she says. "The locker has been an effective way to achieve this.” While Amazon pays a small monthly fee to its brick-and-mortar partners, it saves on shipping costs. "This is a win-win strategy for Amazon as well its partners,” she says.

Due to Amazon's popularity, the lockers can attract many additional customers to Shoppers' stores. “And store traffic is particularly important for brick-and-mortar retailers because their store environment offers many opportunities to entice shoppers to make unplanned purchases,” Zhang says. "Even though a retailer, like Shoppers, is giving up some prime store space for Amazon lockers, the additional store traffic generated by offering such service to Amazon customers should more than make up for this."




About the University of Maryland's Robert H. Smith School of Business

The Robert H. Smith School of Business is an internationally recognized leader in management education and research. One of 12 colleges and schools at the University of Maryland, College Park, the Smith School offers undergraduate, full-time and part-time MBA, executive MBA, online MBA, specialty master's, PhD and executive education programs, as well as outreach services to the corporate community. The school offers its degree, custom and certification programs in learning locations in North America and Asia.