Amazon Logistics 2017Release date: January 10th, 2017 (109 pages) PDF/Powerpoint format. Price: GBP1,990.00 |
Abstract
Shipping has always been a principal driver of Amazon’s strategic investments.
Arguably the most innovative Amazon business unit is currently Amazon logistics. The unit deals with much more than just the logistics by which it ships orders to its customers. Amazon is edging closer to operating a full end-to-end retail model as it beefs up its logistics operations with the ultimate aim of reducing its reliance on thirdparty delivery companies.
And building out a huge logistics network is classic marketplace thinking: better and faster logistics attracts more shoppers and this in turn attracts more 3P sellers, so the flywheel effect will start to kick in again.
In future Amazon could expand Amazon Logistics to become the de facto carrier for all Amazon sales. (This would point to classic ecosystem thinking). The new logistics business will open cross-border commerce to smaller merchants who otherwise wouldn’t bother with it. That in turn would make many more products available to Amazon shoppers around the world.
In future working with Amazon logistics means partnering suppliers will need to optimise and speed up their processes too. Amazon will steer these processes among various suppliers, as it is the only player in this system who can do so and coordinate. Once again more flexibility as a result of picking up from suppliers is also a key concern for Amazon.
In short, Amazon wants to control every link in the supply chain, from sourcing the product to warehousing and now delivery to the doorstep. In certain categories, such as book publishing, it is also manufacturing the product. Owning its own trucking network and drones are part of the last-mile strategy. Such dominance helps iron out inefficiencies in the system, yielding margins. It also enables the company to offer a radically innovative and much better logistics solution (from Prime Now to drones) than currently available on the market.
Moreover in terms of the last mile, Amazon is building out a proprietary infrastructure and network without investing that much into new employees, logistics fleets or by founding a standalone company. For Amazon delivering parcels does not mean running their own service. All it needs is a DC in or close to the city and instead of cooperating with the established logistics providers the online retailer can hire citizen couriers akin to Uber drivers for the last mile. By doing so, much of the risk is outsourced as well.
Amazon is betting that there is soon to be a disruption in distribution processes and costs, both in terms of driverless cars and trucks and fuel (EV, etc). Amazon think that being in that space as those changes begin can be valuable as disruptions mean that market leaders are no longer automatically leaders. And when things change one can really grow.
Table of contents
Executive summary | p7 |
Data | p15 |
Logistics: introduction – the most innovative business unit at Amazon? | p16 |
Marketplace: Net product, service sales, units shipped, 3P % share 2009-15 | p17 |
Marketplace: The main marketplace winner, 1P and 3P contribution in US $m 2010-15 | p18 |
Marketplace: 3P sales in US$m in 2010 – 2015, 3P bigger than 1P | p19 |
Marketplace: Amazon Marketplace 2015 record year | p20 |
Marketplace: UK stats, 3P and 1P neck on neck | p21 |
Data: Average annual spend 11 – 15, USA, DE, Japan, UK, France in local currency | p22 |
Data and KPIs: Average annual spend 2011 – 15e on AMZN 1P, Analysis | p23 |
Data: 1P by geography, average price, total units, customers, frequency 2015 | p24 |
Data: total units shipped 1P and 3P, frequency per country, Analysis | p25 |
Data: shipping costs 2013-15 – the opportunity | p26 |
Data: shipping costs analysis | p27 |
Amazon logistics: costs, items shipped in 2015, a logistics marketplace | p28 |
Data: shipping costs 2015 – cost per unit stable, fixed cost | p29 |
Amazon logistics: US shipping charges per providers, UPS, Fedex | p30 |
Amazon logistics: exceptions, USPS, others, discounts | p31 |
Amazon logistics: price changes in 2016, shipping costs go up again | p32 |
Introduction: future strategy | p33 |
Amazon logistics: a full end-to-end model | p34 |
Amazon logistics: Is Amazon aiming to take over the last mile? | p35 |
Amazon Logistics: the most innovative business unit at Amazon? | p36 |
Amazon logistics: the holiday snafu in 2013/4 and the development of prime Now | p37 |
Amazon logistics: Q2 shipping costs and FBA point to more investments into DCs | p38 |
Global Supply Chain by Amazon | p39 |
Logistics: Project Dragon Boat, one click-ship for seamless international trade | p41 |
Logistics: automate the entire international supply chain, eliminate legacy waste | p42 |
Logistics: Project Dragon Boat, providing ocean freight services | p43 |
EU: ocean shipping similar to trucking and air cargo programmes? | p44 |
In bound logistics | p45 |
EU: new FFC strategy – inbound logistics, “Inbound Preferred Carrier” programme | p46 |
EU: new FFC strategy, “Inbound Preferred Carrier” – how it works | p47 |
EU: The Polish strategy – supporting Amazon’s most important foreign market | p48 |
Logistics: Use of Amazon Logistics to become mandatory for Amazon Retailers? | p49 |
Fulfillment | p51 |
Fulfillment: airfreight operation at Wilmington Air Park | p53 |
Fulfillment: operation Aerosmith, 1m packages a day | p54 |
Fulfillment: Air Operator’s Certificate, could begin offering shipping for 3P in 2017 | p55 |
Fulfillment: taking a 30% Stake in a Large Cargo Airline? | p56 |
Fulfillment: The Amazon deal would transform Atlas | p57 |
Fulfillment: an unprecedented level of retail disruption | p58 |
Outbound shipping | p59 |
Outbound shipping: tackling the last mile | p60 |
Outbound shipping: Fedex dismissal | p61 |
Same Day deliveries | p62 |
UK: % of Amazon Sales by Carrier | p64 |
July 2016: Essex Fullfillment centre and Kiva robots | p65 |
Same Day deliveries: tackling the last mile, Germany | p66 |
EU: new FFC strategy, same day delivery in Munich | p67 |
EU: new FFC strategy, dividing cities into zones, enabling local knowledge | p68 |
EU: new FFC strategy, the neighbourhood in geo location data | p69 |
EU: offsetting conversion with missed deliveries, data, 10-15% fulfilled by partners | p70 |
EU: How dangerous is Amazon Logistics to the competition? | p71 |
EU: Germany new DCs, better space utilisation through kiva and network effects | p72 |
EU: AmazonFresh set up different to USA | p73 |
USA: Amazon’s reach of the shopper population | p74 |
USA: new FFC strategy – stats | p75 |
Lockers | p76 |
Lockers: reasons for the roll out | p78 |
Lockers: the costs of the lockers, Keba AG | p79 |
Lockers: utilisation rate | p80 |
Lockers: Lockers Germany, moving away from the packstations | p81 |
Lockers: France - Amazon deciding against acquiring Colis Privé | p82 |
Lockers: the Hermes approach – viable? | p83 |
Lockers: Closed loop versus open systems | p84 |
Consume the city | p85 |
Consume the city: going head to head with UPS and Fedex | p86 |
Consume the city: damaging efficiencies at 3PL partners p 87 Consume the city: the focus on the last mile | p88 |
Consume the city: Uber and Flex drivers, outsourcing costs | p89 |
Shipping: in home deliveries, innovation and trials | p90 |
Drones | p91 |
PrimeAir: leaving roads and a creaking infrastructure behind, goin’ up in the air | p93 |
PrimeAir: Pony Express-like drone delivery patent | p94 |
PrimeAir: docking stations on vertical structure for a relay race | p95 |
PrimeAir: docking stations to provide free Wi-Fi | p96 |
PrimeAir: route density problems, driverless trucks, “Swarm” logistics | p97 |
PrimeAir: combining trucks and drones; self driving trucks as mobile warehouses | p98 |
Logistics: Drones and trucks | p100 |
Logistics: Drones and trucks - anticipatory shipping | p101 |
Logistics: Drones and trucks - pragmatic and practical solutions | p102 |
Logistics: Drones - hitch rides on trucks/buses en route to delivery location | p103 |
Outlook | p106 |
Sources | p109 |
Table 1: Net product, service sales, units shipped, 3P % share 2009-15 | p17 |
Table 2: Average annual spend 11 – 15, USA, DE, Japan, UK, France in local currency | p22 |
Table 3: 1P by geography, average price, total units, customers, frequency 2015 | p24 |
Table 4: Data: shipping costs 2013-15 – the opportunity | p26 |
Table 5: Data: shipping costs 2015 – cost per unit stable, fixed cost | p29 |
Table 6: UK: % of Amazon Sales by Carrier | p64 |
Chart 1: The main marketplace winner, 1P and 3P contribution in US $m 2010-15 | p18 |
Chart 2: 3P sales in US$m in 2010 – 2015, 3P bigger than 1P | p19 |