What is the Amazon Effect?
Today, we hardly give a second thought to the concept of same-day delivery. However, decades ago, the notion would’ve appeared impossible. Even receiving an item after a few days without the need to pay shipping fees was nearly unthinkable.
When Amazon first started, the first offering of free shipping was on purchases higher than $25. Later they introduced Amazon Prime, which offered two-day shipping for those who paid for an annual membership – meaning that people not only got shipped items free of charge, but they also received their goods much faster.
Fast-forward to today; innovations such as same-day shipping doesn’t even feel like an innovation anymore. And you can get pretty much ANYTHING on Amazon – from books to clothing to appliances and even live ladybugs. Yup, that’s not a typo, you can actually buy live ladybugs on Amazon, look it up! The page boasts: “1500 Live Ladybugs, Live Delivery Guaranteed!! “
Influences Amazon Has on Logistics
Shipping Sizes and Weight
Regardless of the product you purchased on the website, whether it is a book or a flat-screen television, Amazon provides massive versatility to its customers when it comes to shipping using their rapidly growing technological innovations.
In previous years, shipping a smaller item would be very cost-ineffective since it used to be charged by a charge-by-weight system. Amazon changed this when they launched the dimensional weight model, which is now the norm in the logistics industry.
New Delivery Methods
Logistics companies would be closed on Sundays not too long ago, but not anymore. Now it’s just a delivery day like any other, and customers have the option of receiving goods on Sundays.
They have also recently started a new system called Amazon Key, an in-home and in-car delivery service that allows authorised couriers into Amazon Prime customers’ homes, PO boxes or the trunks of their cars at specific times.
The purpose of Amazon Key is to reduce the risk of parcels getting stolen off people’s doorsteps when they’re not at home. The customer buys a kit that Amazon installs, then they will receive notification of their parcel being delivered. Customers can actually watch their delivery in real-time.
The addition of drones in the delivery process has probably been the greatest innovation of all, in recent terms. The drones can travel up to 100 miles an hour, and a shipment can cost as little as $1, creating massive savings in the process. These faster, cheaper shipments cause higher revenues.
Amazon predicts that they will have 450 000 operative drones by 2020 to make worldwide deliveries. This could push growth in the shipping industry even further, but also puts more pressure on retailers to make faster deliveries, forcing them to be creative in discovering how to do this without bankrupting themselves.
The shipping industry is a rapidly growing one, and will soon look completely different from what it does today, just as swiftly as it changed in the last few years.
Shipping companies need to invest in technology that helps them make shipping more cost-effective and more efficient. There’s intense pressure on existing logistics companies to achieve this, but striking the right balance between meeting expectations and managing costs will ensure that their operation runs efficiently for the future.