Amazon delivers a new kind of logistics
Tuesday, November 15, 2016
Although many people are focusing on Amazon's recent earnings miss, it's important to look past that and realize the online retail giant has spent more than ever on logistics infrastructure. Amazon clearly added assets and is hiring 120,000 people to push its internal logistics initiative forward.
Amazon continues to move more logistics in-house, as well as investing in more distribution centers. By taking a page out of Wal-Mart's playbook, Amazon has expanded its distribution centers and created a customized logistics system to support its operations.
Amazon seeks complete control
Amazon continues to shake up the distribution business by increasing its logistics network. This shift in logistics philosophy signals that online buying is growing faster than brick-and-mortar buying.
As a result, Amazon wants complete control of the online buying experience.
This shift is not surprising. When an order is late or lost, Amazon has the customer service headache, not UPS or FedEx.
People know UPS or FedEx are the Amazon delivery agents (carriers), but customers blame the online retailer anyway. If customers are not satisfied with Amazon's resolution of their problems, they might move to another online company like Jet.com for their delivery needs.
The shift to in-house logistics
By taking control of its logistics, Amazon is making a commitment to address all of its customer service issues. Amazon's move away from using small-parcel delivery partners has not gone unnoticed. Parcel delivery giants realize this change could be a signal that more retail giants might move their logistics in-house.
As more retailers move in this direction, there will be a growing need for transportation and logistics talent. Organizations will need to hire the best candidates to compete in the marketplace. Amazon is already hiring logistics talent and buying various companies to support this move.
Seven-day delivery service may become standard
UPS and FedEx currently charge a high premium for delivery on Sundays. But once more companies move logistics in-house, seven-day delivery service will become the norm.
If Amazon moves to operate 24/7 logistics, what will stop it from disrupting logistics by offering weekend deliveries? After all, since most people work weekdays, it seems strange that the two days when people might be home to sign for a package are the two least likely days for delivery.
It would not be surprising if Sunday becomes a big home delivery day in the future. After all, how else is an online shopping machine like Amazon going to compete with a retail operation that is open over the weekend? People want their items now, not delivered during the week when they are not home.
Some customers might view Sunday home delivery as wrong, but consider that not too long ago most stores would close on Sundays. Now, Sunday has become a big retail shopping day as people scramble to get essentials for the coming week.
Ultimately, as much as people might want things to stay the same, they will always change. So it is just a matter of time before our perceptions change about logistics.
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