No platform has an absolute self-operated logistics system. Amazon’s process of integrating the supply chain into a comprehensive logistics provider is carried out in stages. High-quality third-party logistics service providers will become social logistics resources certified by Amazon SPN (Service Provider Network). Overseas purchase is Amazon’s first membership service in the world to provide unlimited free delivery of cross-border Prime product orders throughout the year. Its cross-border orders are directly mailed from the United States to China, and can be delivered to large and medium-sized cities in 5 to 9 working days. According to the destination of the package, it is directly sent to the nearby port, connected to the customs and fast processing channel, and enters the nearest Amazon port operation center after customs clearance. This optimizes the entire cross-border logistics experience and solves the problems of goods authenticity, logistics timeliness, package loss, and after-sales service that often occur in transshipment and purchasing. At present, Amazon is gradually strengthening the control of warehousing, air transportation, distribution, shipping and the first and last kilometer of logistics services, as follows.
1. Warehousing and distribution fulfillment.
Warehousing and distribution are the biggest costs for logistics companies. In this labor-intensive field, it is easy to have the problem of redundant manpower. Similar to AWS cloud computing, Amazon creatively transforms internal resources and services into external business. As shown in Figure 7-6, after Amazon’s logistics service was opened up and productized, the warehouse provided integrated warehouse and distribution services to third-party sellers, which enabled Amazon to more effectively utilize its excess logistics capacity and obtain revenue through warehouse rent + logistics fees + commissions, further enhancing its bargaining power with express delivery companies. For example, 3/4 of Amazon Japan’s delivery is completed by Yamato, and the freight rate is only about half of the market price.
2. Trunk air transport.
In order to cope with the rapidly growing demand for air cargo and reduce its dependence on traditional freight giants such as UPS and FedEx, Amazon has leased dozens of all-cargo aircraft to establish an independent air transport network, using Amazon Prime Air brand cargo aircraft for trunk air transport, and established its first air cargo center in Kentucky, adjacent to the world’s largest air transport center-UPS World Port, and FedEx’s largest package sorting center, with an irresistible growth momentum.
3. Distribution network.
The profit of home delivery is lower than that of delivering goods to corporate customers, because each delivery order of a company usually contains multiple packages. However, in order to gain more control over the terminal, in addition to leasing aircraft, Amazon also provides FTS truckload freight and Seller Flex autonomous delivery service outside of FBA, providing trucks, uniforms, technology and cargo volume to regional logistics partners, recruiting delivery service partners, and entrepreneurs can rent 20 to 40 trucks with Amazon Prime logo for delivery. The cross-border export online delivery provided by Amazon is called “Buy Shipping”, which is picked up by third-party logistics and settled by the platform.
4. Instant delivery + offline stores.
The development trend of new retail is to move towards Phygital “physical digitization”, and the transformation of physical stores into digital stores. Not only online, Amazon wants to become a combination of online “Walmart + FedEx”, making its outlets within reach. 60% of the US population lives within 25km of Amazon warehouses. Amazon has been laying out “speedy delivery” for a long time, providing same-day Prime Now service in major cities, offline convenience store AmazonGo unmanned supermarket, and launching Amazon Fresh fresh food delivery and Whole Foods supermarket service portfolio.
5. Global freight logistics.
After Amazon became a non-vessel operating common carrier, its global logistics booking platform AGL was launched. Sellers can place orders online, confirm bills of lading, track progress, and settle bills, realizing one-stop cross-border logistics solutions such as global shipping, warehousing, packaging and freight delivery, and controlling the first mile transportation from the source of goods in China to the sorting center or port. At present, AGL focuses on the seller’s first-mile needs, collects goods and ships them to the FBA of the destination country, bulk goods are warehoused at the departure port, free lock warehouses, priority appointments for warehousing, efficient and punctual, and improve cash flow. Locking warehouses means that the goods of the same batch of FBA delivery plans are locked and shipped to the designated FC operation center, so as to avoid the same batch of goods being split and distributed to multiple FCs by the system, saving the additional costs of warehouse division. The platform is the rule maker. There is almost no difference in transportation between traditional freight forwarders and FBA first-mile, but if Amazon strongly promotes first-mile logistics and bundles it with FBA, and there is a price reduction due to volume concentration, then the competitive advantage will be immediately apparent.