If you live in an apartment complex you know. Packages pile up in stairwells, landings and hallways. You especially know which of your neighbors avidly use their Amazon prime memberships. With Amazon’s expansion into a growing number of consumer markets, package volume in urban areas will only increase. UPS reported an increase in next day air shipments by 3.9% this year. Consumers are willing to pay more for expedited deliveries and value convenience.
For the past several years, property management groups have struggled with managing the mountains of packages growing at their properties. Not only to keep common areas clear, but to also maintain security. Package theft is on the rise. As thieves spot a UPS or Amazon delivery truck approaching, they wait for delivery and pick up the packages for themselves. Often, deliveries occur during the day when residents are most likely away at work.
The Amazon Key
With the approaching holidays and flood of packages, Amazon got creative with its package distribution model. The Wall Street Journal reports Amazon is signing contracts with landlords and property managers to install Amazon locker systems in large apartment buildings. These contracts currently cover over 850,000 units nationwide. The program is branded as Hub by Amazon.
Amazon is also launching Amazon Key. Available Nov. 8 for Prime members, Key includes an Amazon security camera – the Cloud Cam – and a compatible smart lock. The kit sells for $249.99.
With Amazon Key, when a Prime member orders a package, they can choose the “in-home” shipping option. When the driver arrives with the package, Amazon confirms it is the correct house and opens the door for the driver who will leave the package inside. The Cloud Cam records the entire process.
With Hub by Amazon, lockers only service residents of buildings that pay for the locker system. When a package delivers, the recipient receives a notification to retrieve it from the Hub.
Residents paying high rents in affluent urban areas represent one of the fastest growing Amazon demographics. Professionals that don’t have much time to shop and probably don’t live anywhere near a big box store want everything delivered. Renters in amenity-rich buildings also don’t want to see clutter. The Hubs target them specifically.
The price of a Hub by Amazon locker system runs between $10,000 and $20,000. Most apartment owners don’t plan on charging residents for the Hub, but will instead include it as an amenity. However, the more amenities a building boasts, the more it charges for rent. Greystar, the largest apartment management company in the U.S., plans to install Hubs in 125 properties by the end of the year. Eventually, it will install Hubs in all of its properties encompassing 415,000 units.
Operating Costs
Not only can Amazon charge buildings for owning these locker systems, they also can greatly reduce their last mile delivery costs. The final mile can often be the most expensive part of a delivery. It adds time devoted to delivering one single package to a doorstep. Drivers can now deliver packages in one central location instead of climbing stairs, taking elevators and walking down hallways in large urban high-rises. To most people, saving seconds per package may not seem like a big deal. However, the cumulative time saved per delivery to over 415,000 units to start with will add up to major reductions in Amazon’s operating expenses for servicing its rapidly growing prime loyalists.
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