Keeping Up With Amazon’s One-Day Prime Delivery
In addition to its massive product selection, Amazon has made “fast and free shipping” its mantra, sweeping up approximately 40% of the e-commerce market share in the United States. This has forced other e-commerce companies to up their game in terms of shipping and logistics, with many of them turning to third-party fulfillment providers to help them keep up with Amazon's fast shipping.
In the latest episode of the Unpacking E-Commerce Logistics series, we had the chance to chat with Dean Maciuba, Managing Partner USA and Co-founder of Crossroads Parcel Consulting. With decades of experience in transportation consulting, Dean covered insights on how Amazon gained such a competitive advantage in the industry and what future trends are likely to affect parcel shipping and e-commerce logistics.
Key Factors in Amazon’s Logistics Capabilities
It is no secret that Amazon is a pioneer in the industry when it comes to technology and innovations. The company is also well-known for their investments in the creation of new infrastructure to improve its fulfillment and delivery networks. According to Dean, the size and scope of their forward-stocking fulfillment facilities are the first significant element that needs to be mentioned. In fact, there are 150 of these facilities owned by Amazon. Some of these little fulfillment facilities were located in the middle of huge markets in the city. As a result, they can deliver the goods to the market faster than other providers. Dean believes that One Day Prime is really made possible by Amazon’s wide network because, in most situations, the goods inventory is already close to the clients.
Something else that Dean highlighted was Amazon’s sole focus on shipping for online stores. Even though there is a delivery business run by Amazon Logistics, they choose to only deliver their own packages. This allows them to focus on serving the e-commerce business exclusively and offer excellent service to their customers. Amazon is thus able to develop its business faster than anyone else thanks to the density of its forward-stocking fulfillment hubs.
What Makes Amazon’s Fulfillment Solution Different From the Rest
First and foremost, the fulfillment centers run by Amazon are heavily automated. Dean mentioned that ten years ago, Amazon already had a significant number of robots, which are actually their greatest assistants in efficiently managing their fulfillment centers. In fact, fulfillment facilities might utilize more robots than people. This implies that they don't employ pickers or send people on daily treks to look for stuff over long distances. The picker only needs to complete the last step, which is to choose the right item, after the robots have delivered the items to them. It was also pointed out that Amazon successfully integrates technological solutions. This allows them to communicate with their customers more effectively and save a lot of time.
One-Day-Prime Delivery’s Influence on the Perceived E-Commerce Value Proposition in the US
Amazon can now deliver 60 to 70% of packages for free in a single day. We must point out, though, that Amazon started offering one-day prime shipping before their consumers saw their need for the service. This shows how they actually had the technology, forward stocking fulfillment centers, and foresight to make this happen before the demand was even there.
When you think about one-day delivery, most assume that it must only apply to high-value goods. What makes Amazon’s one-day prime delivery so unique is that the service is actually available for low-valued products and household goods as well. For instance, even if a customer only orders a 5-pound bag of dog food that costs $4, Amazon ensures that it gets delivered in one day for free.
Moreover, Amazon has managed to identify 40 benefits that come with becoming a prime member. In actuality, it is a subscription program that offers consumers lightning bargains, membership sharing, free music downloads, and quick deliveries in addition to a number of other advantages. This certainly altered the value proposition of e-commerce because customers now demand more than just free and quick shipping, making it even more challenging for other retailers to compete.
For the full discussion, check out the video here. You wouldn’t want to miss it!
About Dean Maciuba
Dean Maciuba oversees consultancy projects in the United States as the Managing Partner, USA, for Crossroads Parcel Consulting. He formerly served as Last Mile Experts' managing partner for North America. Dean has also managed general transportation consulting, the design/implementation of cold chain and healthcare distribution solutions, and general transportation consulting for 4Front Consulting Group. Additionally, he worked for UPS and FedEx for more than 37 years in a variety of executive roles in operations, marketing, and sales. His extensive experience enables him to have a distinctive and in-depth perspective on almost all facets of the parcel transportation sector, including the function of Amazon and other providers of parcel transportation/e-commerce fulfillment services in fostering e-commerce.
About Unpacking E-Commerce Logistics Series
Unpacking E-Commerce Logistics brings together some of the best experts in the e-commerce logistics and supply chain space to unpack key concepts from a variety of trending topics, ranging the use of Artificial Intelligence in the industry to embracing hyperlocal delivery in the e-commerce world. An integral part of this series are our 30-minute long Fireside Chats where we ask our thought leaders questions about not just the topic at hand, but also their career paths, challenges they have faced, and even their future plans.
For more exclusive reports, insights, and interviews on the latest updates in e-commerce and logistics, follow us on LinkedIn or join our community as a member.