Amazon as a Distribution Giant


This was, hands down, my most favorite article I have read all semester.  I work in supply chain management, and Amazon has this stuff figured out.  Check out the highlights from the article below:


·     Amazon is helping industrial real estate blow up
·      During the holiday seasons, Amazon warehouses ship 1 million items + a day
·      Some of the fulfillment centers cover upwards of 1 million square feet
·      Amazon now has warehouses within 20 miles of half the US population
·      Amazon accounts for 10% of UPS revenues
·      Amazon now has its own delivery service
·      Amazon is the largest corporate buyer of renewable energy
·      Amazon has 42 cents of every dollar spent online
·      Amazon deliveries require 1 minute of human labor
Of the above statements, one of the most profound is the sheer market that Amazon has.  To think that an Amazon DC is likely 20 miles or less from any of us is mind-blowing.  UPS, one of the largest 3PL’s in the world, derives 10% of its revenue from Amazon fulfillment.  Also, Amazon as an online retailer accounts for 42 cents of every dollar spent online.  Think of all the other retailers you shop at, J Crew, Bonobos, Nike, Vans, etc., that do not even come anywhere near the buying power Amazon has.
This directly relates to material covered in Chapter 12 of our textbook.  Amazon is practicing extremely efficient logistics management.  Logistics management describes the integration of activities needed to ensure the efficient flow of raw materials, in-process inventory, and finished goods from producers to customers.  Think of Amazon as a finished goods retailers, and its DC’s as the producers.  The fact that it takes a minute or less of human labor to process an Amazon delivery is extremely effective logistics management.  

Comments

  1. Great post Cam, I was just reading another article on Amazon and its 50% growth in third party sales through its platform last year alone. The stat that Amazon accounts for $0.42 of every dollar spent online is just absurd. How long until that doubles or they just completely monopolize retail and distribution?

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