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Amazon Logistics 2017

Amazon Logistics 2017

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.

Executive summary
Logistics: introduction – the most innovative business unit at Amazon?
Marketplace: Net product, service sales, units shipped, 3P % share 2009-15
Marketplace: The main marketplace winner, 1P and 3P contribution in US $m 2010-15
Marketplace: 3P sales in US$m in 2010 – 2015, 3P bigger than 1P
Marketplace: Amazon Marketplace 2015 record year
Marketplace: UK stats, 3P and 1P neck on neck
Data: Average annual spend 11 – 15, USA, DE, Japan, UK, France in local currency
Data and KPIs: Average annual spend 2011 – 15e on AMZN 1P, Analysis
Data: 1P by geography, average price, total units, customers, frequency 2015
Data: total units shipped 1P and 3P, frequency per country, Analysis
Data: shipping costs 2013-15 – the opportunity
Data: shipping costs analysis
Amazon logistics: costs, items shipped in 2015, a logistics marketplace
Data: shipping costs 2015 – cost per unit stable, fixed cost
Amazon logistics: US shipping charges per providers, UPS, Fedex
Amazon logistics: exceptions, USPS, others, discountsc
Amazon logistics: price changes in 2016, shipping costs go up again
Introduction: future strategy
Amazon logistics: a full end-to-end model
Amazon logistics: Is Amazon aiming to take over the last mile?
Amazon Logistics: the most innovative business unit at Amazon?
Amazon logistics: the holiday snafu in 2013/4 and the development of prime Now
Amazon logistics: Q2 shipping costs and FBA point to more investments into DCs
Global Supply Chain by Amazon
Logistics: Project Dragon Boat, one click-ship for seamless international trade
Logistics: automate the entire international supply chain, eliminate legacy waste
Logistics: Project Dragon Boat, providing ocean freight services
EU: ocean shipping similar to trucking and air cargo programmes?
In bound logistics
EU: new FFC strategy – inbound logistics, “Inbound Preferred Carrier” programme
EU: new FFC strategy, “Inbound Preferred Carrier” – how it works
EU: The Polish strategy – supporting Amazon’s most important foreign market
Logistics: Use of Amazon Logistics to become mandatory for Amazon Retailers?
Fulfillment: airfreight operation at Wilmington Air Park
Fulfillment: operation Aerosmith, 1m packages a day
Fulfillment: Air Operator’s Certificate, could begin offering shipping for 3P in 2017
Fulfillment: taking a 30% Stake in a Large Cargo Airline?
Fulfillment: The Amazon deal would transform Atlas
Fulfillment: an unprecedented level of retail disruption
Outbound shipping
Outbound shipping: tackling the last mile
Outbound shipping: Fedex dismissal
Same Day deliveries
UK: % of Amazon Sales by Carrier
July 2016: Essex Fullfillment centre and Kiva robots
Same Day deliveries: tackling the last mile, Germany
EU: new FFC strategy, same day delivery in Munich
EU: new FFC strategy, dividing cities into zones, enabling local knowledge
EU: new FFC strategy, the neighbourhood in geo location data
EU: offsetting conversion with missed deliveries, data, 10-15% fulfilled by partners
EU: How dangerous is Amazon Logistics to the competition?
EU: Germany new DCs, better space utilisation through kiva and network effects
EU: AmazonFresh set up different to USA
USA: Amazon’s reach of the shopper population
USA: new FFC strategy – stats
Lockers: reasons for the roll out
Lockers: the costs of the lockers, Keba AG
Lockers: utilisation rate
Lockers: Lockers Germany, moving away from the packstations
Lockers: France - Amazon deciding against acquiring Colis Privé
Lockers: the Hermes approach – viable?
Lockers: Closed loop versus open systems
Consume the city
Consume the city: going head to head with UPS and Fedex
Consume the city: damaging efficiencies at 3PL partners
Consume the city: the focus on the last mile
Consume the city: Uber and Flex drivers, outsourcing costs
Shipping: in home deliveries, innovation and trials
PrimeAir: leaving roads and a creaking infrastructure behind, goin’ up in the air
PrimeAir: Pony Express-like drone delivery patent
PrimeAir: docking stations on vertical structure for a relay race
PrimeAir: docking stations to provide free Wi-Fi
PrimeAir: route density problems, driverless trucks, “Swarm” logistics
PrimeAir: combining trucks and drones; self driving trucks as mobile warehouses
Logistics: Drones and trucks
0 Logistics: Drones and trucks - anticipatory shipping
1 Logistics: Drones and trucks - pragmatic and practical solutions
2 Logistics: Drones - hitch rides on trucks/buses en route to delivery location
Table 1: Net product, service sales, units shipped, 3P % share 2009-15
Table 2: Average annual spend 11 – 15, USA, DE, Japan, UK, France in local currency
Table 3: 1P by geography, average price, total units, customers, frequency 2015
Table 4: Data: shipping costs 2013-15 – the opportunity
Table 5: Data: shipping costs 2015 – cost per unit stable, fixed cost
Table 6: UK: % of Amazon Sales by Carrier
Chart 1: The main marketplace winner, 1P and 3P contribution in US $m 2010-15
Chart 2: 3P sales in US$m in 2010 – 2015, 3P bigger than 1P

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