Amazon has done the unimaginable – developed an online retail store focused entirely on offering a positive customer experience. Their massive store allows customers to order just about anything and get it delivered just about anywhere – fast. How fast? Most products are delivered within one to two days, and some even show up on the same day they’re ordered.
Successfully pulling this off marks a huge shift that has never been seen before. As a side effect, many retail companies and warehouses have found themselves evaluating their own supply chain operations, looking for ways to improve as they struggle to stay competitive.
How Amazon Has Affected Logistics
The Amazon effect has logistics companies tackling two primary pain points: efficient warehousing and expedient delivery. By optimizing these two things, warehouse managers hope to create more streamlined systems and offer better service. These managers are also taking a hard look at the technology that Amazon is using to operate at such a high level, and are investing more money into management solutions. These tools will help them gather the data they need to make better order fulfillment and inventory decisions.
How Amazon Does It
Amazon stocks multiple warehouses in key locations across the country with an abundant supply of product. Using an omnichannel demand methodology allows their customers to order products that can be quickly picked, shipped, and delivered from a nearby warehouse.
Roadblocks for Warehouse Managers
Amazon’s method is not viable for every business. In addition to the immense costs associated with operating multiple warehouses, creating such a vast inventory can lead to significant product waste. Instead of trying to mimic exactly what Amazon is doing, logistics companies are seeking more cost-effective, agile supply chain management tools that offer real-time insights and better visibility.
Benefits of Better Supply Chain Visibility
Understanding order history and inventory levels allows companies to intelligently stock items. For example, frequently ordered products can be stocked in all warehouses to cut down on shipping time. Or, products that are more frequently ordered in certain states can be stocked in warehouses closest to that area. Intelligent stocking and warehousing saves companies money on shipping and increases customer satisfaction, which can lead to more repeat business.
Amazon Effect of Delivery Logistics
When it comes to delivery, Amazon first relied on UPS delivery services to get products to consumers. Now, the retailer has added its own fleet of trucks to complement UPS deliveries. In addition, the company has been in talks about leasing its own aircraft fleet since 2015.
Some shippers have started using Amazon’s strategies to enhance their delivery capabilities. For example, they are outsourcing shipping to third-party logistics and shipping companies (like Flock Freight®) that have large transportation networks.
This gives shippers access to many competitive delivery options, rather than just one fleet. This can allow companies to offer faster delivery services while still keeping their transportation costs low.
Amazon’s bold warehouse and delivery strategies have had a profound effect on the retail industry around the globe. Many companies will continue to keep a close eye on the e-commerce giant’s every move, treating them as a testing ground. When Amazon sees success, other retail companies will strive to adopt similar models.