Blog postsFebruary 23, 2016
Logistics 2.0: Amazonified Logistics Part 1
In this weeks episode of Logistics 2.0, we discuss the Top Ten things Amazon has done to change the supply chain & logistics industry. From grocery delivery to drones, Amazon continues to push all of us to be better in the name of improving customer experience.
Welcome to Logistics 2.0. I'm Karl Siebrecht with FLEXE. Anyone in the retail or logistics industry has seen the dramatic impact that Amazon has had on our industry. Their massive investments and true innovations across the board have really reshaped the world as we know it.
They've had such an impact on everything from the marketing front-end to the consumer experience to the fulfillment and logistics mechanisms that make it all possible. And it feels like they're really just getting started. They've had such a major impact that we decided to feature them in a new Top 10 List. What we're calling, "The Top 10 Examples of Amazonified Logistics." And these will roughly be in chronological order. Let's jump in.
Number One: Many years ago Amazon began to offer its merchants who were selling product through their portal back-end logistic services commonly called, "Fulfillment by Amazon" or FBA. This allowed these, generally speaking, smaller merchants to leverage all the infrastructure that Amazon already had in place for doing fulfillment and delivery to its consumers. And in this way, those companies could more efficiently deliver their products to the end consumer.
Number Two: Again several years ago Amazon Prime really started to take off. This was not a new innovation in retail but applied to the Amazon model it was pretty incredible. Essentially, for a fixed fee, consumers could get much faster and cheaper shipping for all the products that they've ordered through the portal. Since launching it, millions have signed up for this service and it's possible that this is one of the most fundamental initiatives that have changed consumer expectations, at least for e-commerce, over the last 20 years.
Number Three: In an effort to make their warehouses even more efficient Amazon deployed Kiva robots. They worked with Kiva for a couple of years and it worked so well they eventually bought the company.
Number Four: They launched Amazon Fresh, their entry into the grocery delivery market where they now deliver food next day into several major metropolitan markets.
Number Five: Amazon Flex, this service is much like Uber for local delivery. They've created an entire program to hire drivers to facilitate the next phase of their very quick delivery services, which is number six.
Number Six: Amazon Prime Now. If overnight shipping isn't fast enough, Amazon's ready to ship you certain items within a matter of hours after you've ordered them through a mobile app on your phone.
Number Seven: Amazon takes a step back in time and opens up a physical bookstore, actually, here is Seattle. So why did they do this? I think they've done it so they can better understand the worldview of so-called clicks and bricks retailers. Through this store, they can get a feel for how consumers shop in the physical world, and they can also start to understand dynamics around ship from store, which has become a very critical tactic in the broader omnichannel strategy.
Number Eight: Amazon is planning to lease airplanes. In an attempt to gain further control over their logistics and probably also to better manage their massive peak in Q4, they're planning to move their own goods across their own warehouse network using their own planes.
Number Nine: Drones. As if airplanes weren't enough, they've got massive amounts of innovation and attention on creating drone technology and a whole network to enable faster and more efficient delivery. I've heard lots of naysayers on this one. Will it be difficult to create the technology let alone shape the regulatory landscape? Yes, big time, I think. Personally, though, I'd add this to the long list of things that didn't seem possible and then became a reality.
If anyone can match the necessary world-class execution capability required to make this happen with the vastness of this vision, it's Amazon.
And Number Ten: Just recently, Amazon has publicly recognized that established logistics companies are competitors of theirs. They did this recently in their 10Q. They go on to clarify that they don't intend to stop using other logistic providers, but that they feel like they need more of their own capabilities to deliver on their brand promise to their consumers.
The implication is clear. Amazon isn't making these investments just to power its own e-commerce platform. It plans to continue to offer logistics as a service to many, many other companies out there. This is quite a list, very exciting to some, terrifying to others. But for all of us in logistics, it's a reality. The truth is it's not just a list of 10 investments. I'm sure we've missed others. More importantly, if you step back and look at it, it's a steady streamline progression of investments and innovations that this company is making to continue to fulfill its mission of creating a better consumer experience in the retail sector.
Tune in next time if you'd like to hear some of our ideas on how companies like yours can compete with what they're doing. If you enjoyed this content, please subscribe to our channel. Please also share your comments. We'd love to hear them. That's it for this week. I'm Karl Siebrecht with FLEXE. Thanks for watching Logistics 2.0.