By Laura Kusisto
Amazon.com Inc. is taking over the package rooms of some of the
country's largest apartment landlords, in a move that could help
consolidate its control over how goods make it from the warehouse
floor to the front door.
Amazon has signed contracts with apartment owners and managers
representing more than 850,000 units across the U.S. to begin
installing Amazon locker systems in their buildings, according to
the landlords. Amazon has commitments to install the lockers in
thousands of properties, many before the peak holiday shopping
season, according to a person familiar with the matter.
Several of the nation's largest operators, AvalonBay Communities
Inc., Equity Residential, Greystar and Bozzuto Group, have signed
up so far, company executives said.
For several years, landlords have struggled with how to manage
the growing mountains of packages they receive each day. Staff at
larger buildings end up devoting several hours a day sorting mail,
while boxes are piled in every spare cranny. Most say it is the
single largest problem they face.
Amazon's move, if successful, is likely to shift how the biggest
apartment operators deal with packages toward a fully automated
system that residents will be able to access 24 hours a day.
The locker program, dubbed Amazon Hub, will accept packages from
all carriers and not just for purchases made on Amazon. They will
be open only to residents, not the wider community. Residents will
receive a notification when they have a package and a code allowing
them to open one of the slots.
Apartment owners pay about $10,000 to $20,000 to purchase the
lockers initially and don't pay a monthly fee. Most landlords said
they don't plan to charge residents but to offer it as an amenity.
They could also make back some of that cost in savings on staff
labor.
Greystar, the largest apartment manager in the U.S., currently
has commitments to install the Hub system in 125 communities over
the next several months. Next year it plans to offer the locker
system in all buildings that Greystar owns or manages, according to
Gardner Rees, senior managing director of Advantage Solutions for
Greystar.
Karen Hollinger, vice president of corporate initiatives at
AvalonBay, which has an ownership interest in about 80,000
apartments, said the average apartment community in the company's
portfolio now receives some 1,000 packages a month, up from 650 a
year ago. She said AvalonBay has seen a 30% annual increase in the
volume of packages it receives for several years running.
Ms. Hollinger said the company has experimented with using other
locker systems, but going forward will only install Amazon systems.
AvalonBay started installing the lockers about a month ago.
AvalonBay plans to install the lockers in 30 communities this year
and at least 70 more in 2018 if that goes well.
Toby Bozzuto, chief executive at Bozzuto Group of Greenbelt,
Md., which manages roughly 68,000 apartment units, said staff at
one of his apartment complexes spend about three hours sorting
packages, which are cluttering up his buildings.
"I think about how much money I spend on my amenity spaces and
all of a sudden we were in a situation pre-Amazon hub where we had
boxes stacking up," he said. Bozzuto is in the process of
installing the lockers in four buildings, including one aimed at
residents 55 and over.
Amazon has been searching for ways to make deliveries cheaper.
It has recruited a fleet of citizen drivers via its Flex program,
which allows people to drop off packages from their cars. It has
developed its own air and cargo networks, too.
The most expensive leg of any delivery is the so-called last
mile: getting a package to the doorstep. Amazon already has added
lockers throughout the U.S., including announcing it is rolling
them out at its newly acquired Whole Foods stores.
For Amazon -- or any package carrier -- it is all about density.
The more places a driver has to stop and drop of a package, the
more expensive the process. It also increases the likelihood of a
stolen order if it is dropped off unsupervised.
So dropping off a load of packages in one spot, like a locker or
apartment office, is a huge cost saver. And as apartment managers
grow increasingly frustrated with more deliveries to take care of,
lockers become more attractive.
One issue for landlords has been that it is challenging to
update lockers as demand grows and technology changes. Amazon will
make lockers that can be placed both indoors and outdoors, making
it easier for landlords to add lockers if the volume of packages
that residents order exceeds the space they have in their
mailrooms. The lockers will also have cellular connectivity so
apartment owners don't have to worry about running an Ethernet
cable to them outdoors.
One problem Amazon hasn't solved: oversize packages. Ms.
Hollinger said Avalon has had to contend with deliveries including
furniture to outfit an entire two-bedroom apartment, kayaks and
even hub caps. No locker system can reasonably solve that
problem.
"The package lockers are quite helpful, but the volume will be
hard to sustain in the long term," she said.
Mark-Taylor Companies, one of the largest apartment managers in
Arizona with some 15,000 units, was an early adopter of Amazon
lockers, which it installed in all of its buildings. The lockers
are only used for Amazon packages.
Chris Brozina, an executive vice president, said he was trying
to figure out how to solve his growing package problem and
approached Amazon because he figured the online shopping giant
would want to help make it easier for his residents to shop online.
Mr. Brozina said one of his buildings can receive as many as 15,000
packages a year, about half of which are from Amazon.
"We called every Seattle number we could find until we found
someone," he said. Amazon's lockers, which he installed two years
ago, solved a "monster component" of his package problem, Mr.
Brozina said.
Several other startups have sprouted up in recent years that
sell or rent locker systems to landlords to help automate their
package systems.
Many have faced challenges adapting to the pace of technological
change and to the rapidly growing volumes of packages that
landlords receive. The costs of installing the systems can also be
a turnoff since residents, used to free or cheap delivery, are
unlikely to pay for the service, meaning landlords may be sinking
significant dollars into it with no direct financial benefit.
Owners said Amazon is offering its lockers at about half the
cost it had previously been charging.
Laura Stevens contributed to this article.
Write to Laura Kusisto at laura.kusisto@wsj.com
(END) Dow Jones Newswires
October 17, 2017 14:11 ET (18:11 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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