Amazon started operating its online business in 1995. The founder, Jeff Bezos, chose picked the name Amazon from the dictionary because of the hidden meaning of the word, i.e. exotic and different, which conveys the sense intended by Bezos. In other words, he wanted Amazon to run the world’s largest business, as Amazon is the world’s largest river, and it now seems that the goal has been achieved as evidenced the company’s present worth currently standing at billions of dollars.
Amazon first set out to conduct business as an online bookstore after Bezos had read that web commerce grew at the rate of 2,300% in 2000. Despite the launch of its office in Bezos’ garage in Washington, D.C., the company could establish the head office in Seattle along with the expansion globally (involving offices and warehouses) within only a few years since. Nevertheless, it is generally known that one of Amazon.com’s keys to success has been the business model centering on warehouses, otherwise known as Fulfillment Centers, set up at the right or strategic locations which are key logistic components. Comparable with a market-place, it has to give top priority to effective inventory management to be able to handle large customer needs each day.
It is indeed miraculous for Amazon’s modest but exceedingly high-tech warehouse on the fifth floor of an office building in Midtown Manhattan in New York to be able to affect the ultrafast or within-one-hour delivery to end customers in Manhattan, Brooklyn and Long Island. New York City is one of the 20 cities in the U.S. where large numbers of Amazon’s prime members live. Its prime membership includes a special Ultrafast Delivery service which means members who pay a flat rate of $99 can order ice cream from Ben & Jerry’s, for example, at the last minute on Christmas Eve and have the order delivered by Amazon in time. During this year’s Christmas festival, Amazon planned to play the role of Santa Claus and timely deliver goods to its customers before midnight on Christmas Eve, an innovation which was expected to hike its sales volume by 14 – 25% over that registered in Q4 of the previous year.
Amazon staff are incredibly capable of locating items of all sizes on customers’ orders, be they Gatorade on the same shelf as children’s books or even cereals on the same shelf as electronic equipment and devices, being stored in the 40,000-sq.ft. warehouse. On the surface, it would seem that those items have been placed at random while, in fact, this is not the case. In charge of packing goods according to customers’ orders, Amazon warehouse staff, known as “pickers”, go about their business of picking up the items swiftly and their feet move as though they were in a sprint race to ensure prompt delivery within an hour of order. These pickers also work like New York taxi drivers who know every nook and cranny of the city thanks to high-tech algorithm which has been applied to the management of Amazon’s fulfillment centers and, in turn, helps them achieve the fastest speed possible in picking goods on customers’ orders.
An integration of humans’ expertise and advanced technology has proved key to Amazon’s success in delivering goods to its customers almost at the instant the orders are received. Swiftness is essential to delivery within an hour (done every 60 minutes particularly in New York City where traffic situation and public transport are unpredictable). As such, Amazon has to give top priority to work efficiency as regards timely delivery which is defined as well as restricted by time. In its case, work efficiency is possible thanks to swift movement and because no time is wasted to consider how goods should be laid out on the shelves at the Fulfillment Center. Rather, time is spent to consider how the items can be fastest and most accurately picked, packed and delivered. Once goods have been completely packed, the pickers can transfer the packages to transport service providers for instant delivery. The transport service providers consist of both Amazon employees and other parties who are Amazon’s business partners.
The roles of logistics providers are to deliver the goods to end customers as quickly as possible, especially when customers choose to ship “Ultrafast” or one-hour deliveries that exploits a range of different modes of transportation, including on-foot, cycling, public transit systems, and motor vehicles, or whichever combination of modes that yield the shortest delivery time.
Only a minority of items are actually warehoused. Normally, warehouses in busiest of cities like New York will store large portions of consumer goods, household appliances, including seasonal products as well, as clients tend to shop for seasonal items according to the period of the year, for example, snow shovels in the winter and gardening tools and leaf blowers in spring, etc. As it found out that 1-2 hours Ultrafast Deliveries usually involve products that aren’t stored in volumes, Amazon has added a new line of product various alcohol beverages to be distributed by the hour in the Manhattan area. Thus, Amazon’s inventoried products are always changing according to season and on-demand volumes.
Although Amazon is a well-recognized leader of the online retail industry today, the “on-demand delivery”business model has led other players in to the competition against Amazon, such as Postmate; a US logistics service provider comparable to Uber, providing transportation services to more than 100 destination cities across the country in an hour, as well as Car-hailing service Uber that is also competing in the same business field with UberRush and Instacart services, too, that allows the customer to determine the time of delivery of household goods themselves own (the fastest under one hour), and so on.
Amazon continues to focus on future trends, namely, the “Package-hauling Drone Aircraft”, or “drone shipping”(with pending rules and regulations’ challenges in the areas of security and safety). In the case of using drones for “Prime Air services”, Amazon aims for under-30-minute deliveries. In the past, two-day deliveries were considered fast, however, Amazon believes 1-2 hours is the right delivery time standard, rather, and should the standard be implemented successfully will make it very difficult for competitors to step up their game in even terms with Amazon with such an impeccable online retail performance.
Compile by BLOG.SCGLogistics
Reference and Pictures time.com, digitaltrends.com, cnbc.com, amazon.com (phx.corporate-ir.net)