From its beginnings as an online bookseller in the 1990’s to the place where anyone can buy nearly anything, Amazon is now the leading e-retailer in the US. The company is frequently called a “disruptor,” and is now leading the way for improvements in logistics, and ultimately, 3PL.
One of the unique selling points is their emphasis on faster shipping. Amazon’s exponential growth has included the improvement and upgrade to the logistical side of the business. But since Amazon isn’t actually a 3PL, but a retailer, it doesn’t always follow the rules.
The company’s investment in logistical infrastructure is a strong indicator that they will be expanding into a 3PL, and possibly acquiring one. Other indicators include:
- The acquisition of thousands of trailers in the US, and adding the Amazon branding
- The leasing of 20 cargo planes (domestic), called Amazon Air
- Rapid expansion of sorting and fulfillment centers around the US
- Increased the number of Amazon Fresh grocery delivery stations and Amazon Prime Now hubs throughout the US
- Rapid expansion of European operations, including building their fulfilment and delivery network in each country
- Expanded shipments into China using Shanghai’s free trade zone
- Registered as a non-vessel-operating common carrier to help manage the movement of goods from China into the US
Obviously, Amazon sees investment in logistical infrastructure as an important part of its continued success.
Fulfillment By Amazon (FBA)
With this program, small and medium-sized businesses can leverage Amazon’s infrastructure to deliver their products to customers. By shipping their products to Amazon, a business simply has to keep doing business while Amazon takes care of their supply chain operations, including picking, packing, and even customer service.
This means that while smaller companies can reap the benefits of Amazon association, and Amazon can make money as a pseudo-3PL provider, the company will progressively upgrade their infrastructure.
But like any business, Amazon is always looking for ways to lower their shipping and other operating costs. In order to do that while upgrading infrastructure, the company passes these costs along to FBA members through FBA rate increases.
Unfortunately, since Amazon isn’t the same as a 3PL, and scaling storage up and down isn’t an option as it is with a 3PL company. Many 3PLs have in-house fulfillment infrastructures that allow you to scale up for higher sales periods (like the holidays) and scale down when needed (like after the holidays.)
It can be one of the most complicated parts of shipping—getting something to its final destination. In Amazon’s case, that “last mile” could include a customer’s home or business location, or to the door of an apartment or office in a multi-tenant building. Having more control of that “last mile” allows Amazon to expand their hours for delivery, especially with drivers who are contracted to deliver packages directly to customers.
While Amazon’s much-ballyhooed drone delivery system (called Amazon Prime Air) is still awaiting deployment, they have taken last-mile delivery into its own hands.
The company has an entire team called Last Mile, consisting of software engineers, computer vision scientists and others in the IT realm who are tasked with getting packages to customers faster and more efficiently.
On the ground, Amazon Delivery Service Partners are franchised small businesses that do one thing: drive packages from a fulfillment center to a customer’s front door. For about $10,000, an individual with no experience in logistics can become an Amazon delivery company. Once incorporated, the business owner can hire drivers for a fleet of leased vehicles to do package delivery for Amazon.
Let 3PL Worldwide Handle Your Logistics Needs
3PL offers your company logistical services as well as additional services such as a call center, bicoastal warehouse space in Southern California and Connecticut, as well as transport nearly anywhere. Located in Southern California, we’re ready to help, so contact us today at (877) 444-0002 or use our online contact form.