AMAZON'S CRAZY LOGISTICS SYSTEM!
Summary
TLDRAmazon, the world's largest online retailer, has seen shipping costs soar from $8.7 billion in 2014 to $27.7 billion in 2018. To combat this, Amazon Prime Air was launched in 2015, expanding from 20 to 50 planes by 2019 with more on order. This in-house delivery service, operated by partner companies, has reduced costs and increased efficiency, with Amazon processing and delivering 26% of its online sales without third-party help. Amazon also plans a $1.5 billion air hub in Kentucky for 100 planes by 2021, aiming to be 100% carbon-free by 2030, showcasing its commitment to innovation and sustainability in logistics.
Takeaways
- 🌐 Amazon is the world's largest online retailer and consequently has the largest logistics operations, spending billions on shipping costs.
- 🚀 To reduce shipping expenses, Amazon launched Amazon Prime Air in 2015, a delivery service using Amazon-branded aircraft operated by partner airlines.
- 📈 Amazon's shipping costs increased from $8.7 billion in 2014 to $27.7 billion in 2018, highlighting the need for efficient logistics solutions.
- 🛫 Amazon Prime Air started in Seattle and expanded across the U.S., operating from 21 airports and growing its fleet from 20 to 50 planes by 2019.
- 💰 Amazon estimates savings of $2 to $4 per package with Prime Air, potentially saving billions in shipping costs annually.
- 🏢 Amazon is building a $1.5 billion air hub in Cincinnati, expected to accommodate 100 planes and schedule 200 flights daily.
- 📦 Amazon handles 26% of its online sales without third-party shippers, a figure expected to rise as Prime Air expands.
- 🔄 Amazon's two-day shipping promise to Prime members increased its customer base by over 17%, putting pressure on logistics to meet commitments profitably.
- 🚚 Amazon ordered 20,000 vans in 2018 and expanded its Delivery Service Partner program to take more control of the supply chain.
- 🌿 Amazon aims to make its shipping 100% carbon-free and has launched 'Shipment Zero', targeting a 50% reduction in carbon footprint by 2030.
- 🔝 Amazon is testing advanced delivery methods like Scout robots and drone deliveries, aiming to revolutionize the logistics industry further.
Q & A
What is Amazon's position in the online retail and shipping industry?
-Amazon is the largest online retailer in the world, which also makes them the largest shipper of goods globally.
How much did Amazon spend on shipping costs in 2014 and what was the value of the products shipped?
-In 2014, Amazon spent $8.7 billion on shipping costs for products worth $88 billion.
What was the increase in Amazon's shipping costs by 2018?
-By 2018, Amazon's shipping costs had grown to $27.7 billion.
Why did Amazon launch Amazon Prime Air?
-Amazon launched Amazon Prime Air on November 1st, 2015, to innovate their shipping operations and cut down on shipping expenses.
Which companies operate Amazon's branded aircraft for Prime Air?
-Amazon's branded aircraft for Prime Air are operated by Air Transport International, ABX Air, Atlas Air, and Southern Air.
How many airports does Amazon Prime Air operate from as of 2019?
-As of 2019, Amazon Prime Air operates from 21 airports in the United States.
What was the growth in Amazon's fleet size from 2015 to 2019?
-Amazon's fleet size grew from 20 planes in 2015 to 50 in 2019, with an additional 25 more on order with Boeing.
What percentage of Amazon's online sales are processed, shipped, and delivered without third-party companies?
-As of mid-2019, Amazon processes, ships, and delivers 26% of their online sales without the help of third-party companies.
How much does Amazon estimate to save per package by handling its own shipping with Prime Air?
-Amazon estimates that it saves around $2 to $4 per package by handling its own shipping with Prime Air.
What is the estimated saving for Amazon in shipping costs by handling its own shipping in 2019 according to Morgan Stanley?
-Morgan Stanley estimates that in 2019, Amazon will save around $1 to $2 billion in shipping costs by handling its own shipping.
What is the purpose of Amazon's 1.5 billion dollar air hub in Cincinnati Northern Kentucky International Airport?
-The air hub, set to open in 2021, will have the capacity for 100 planes, doubling the number of Amazon's fleet, and plans to schedule 200 flight landings and departures each day.
How has Amazon's two-day shipping guarantee for Prime members impacted its customer base?
-The two-day shipping guarantee for Prime members grew Amazon's customer base by over 17%.
What challenges has Amazon faced in its logistics network, particularly with USPS?
-Amazon has faced challenges with USPS, particularly in handling the very remote homes where it would not be economically feasible for Amazon to have shipping infrastructure.
What steps has Amazon taken to take more control of its supply chain management?
-Amazon has ordered 20,000 vans and contracted drivers for the final step in the delivery system, and expanded the Delivery Service Partner program to encourage employees to start their own logistics companies.
What are some advanced delivery methods Amazon is testing to improve delivery times?
-Amazon is testing advanced delivery methods like Scout sidewalk robots, Shipping with Amazon, and drone delivery for packages weighing less than 5 pounds within 10 to 20 miles of fulfillment centers.
What is Amazon's Shipment Zero initiative and its goal for carbon footprint reduction?
-Amazon's Shipment Zero initiative aims for 100% carbon-neutral shipping. Its immediate goal is to lower the carbon footprint by 50% before the year 2030.
How does Amazon plan to achieve its carbon-neutral shipping goals?
-Amazon plans to achieve carbon-neutral shipping by using renewable energy sources, developing electric semi-trucks, and utilizing biofuels in airplanes.
Outlines
📦 Amazon's Shipping and Logistics Innovations
Amazon, the world's largest online retailer, has seen its shipping costs rise from $8.7 billion in 2014 to $27.7 billion in 2018, reflecting the exponential growth of its sales. To manage these costs, Amazon launched Amazon Prime Air in 2015, a delivery service operated by third-party companies. The service started in Seattle and expanded across the U.S., operating from 21 airports by 2019. Amazon's fleet grew from 20 to 50 planes in the same period, with 25 more on order. Amazon estimates savings of $2 to $4 per package with Prime Air, compared to third-party carriers like FedEx and UPS, which cost about $9 per package. This initiative is expected to save Amazon around $1 to $2 billion in shipping costs annually. Amazon's logistics network is also expanding with a $1.5 billion air hub in Cincinnati, set to accommodate 100 planes and schedule 200 flights daily by 2021. Amazon's push for faster delivery times, such as one-day shipping, puts pressure on the shipping industry and has led to the exploration of advanced delivery methods like Scout sidewalk robots and drone deliveries. The company's supply chain management involves keeping eligible items in fulfillment centers, packing them upon order, and then shipping them to primary hubs for final delivery via various carriers. Amazon's goal is to take more control of its supply chain, reduce reliance on USPS, and innovate in logistics to meet customer expectations and delivery deadlines.
🚀 Amazon's Future in Logistics and Carbon-Neutral Shipping
Amazon is not only aiming to revolutionize the logistics industry but also to achieve ambitious environmental goals. The company has been testing advanced delivery methods like Scout robots and the Shipping with Amazon program, which offers competitive shipping rates. One of the most anticipated services is drone delivery, which promises to deliver packages weighing less than 5 pounds within 10 to 20 miles of fulfillment centers in under an hour. Amazon has faced challenges in implementing this service but is nearing a fully operational program. The company's future mission for Prime Air includes making deliveries faster and achieving 100% carbon-free shipping. Amazon has launched the Shipment Zero initiative, aiming to reduce its carbon footprint by 50% before 2030. To reach this goal, Amazon is exploring the use of electric semi-trucks, biofuels, and renewable energy sources like solar and wind power. As consumer demands evolve, Amazon is expected to continue innovating in delivery times and methods, potentially leading to even faster and more sustainable shipping solutions. The video concludes by inviting viewers to share their thoughts on Amazon's logistics system and potential future developments.
Mindmap
Keywords
💡Amazon Prime Air
💡Logistics
💡Shipping Costs
💡Supply Chain Management
💡Fulfillment Centers
💡Sustainable Shipping
💡Drone Delivery
💡Delivery Service Partner Program
💡One-Day Shipping
💡Third-Party Shipping
Highlights
Amazon is the largest online retailer and shipper of goods in the world.
Amazon's shipping costs grew from $8.7 billion in 2014 to $27.7 billion in 2018.
Amazon Prime Air was launched on November 1st, 2015, to innovate shipping operations.
Amazon owns the delivery service but outsources operations to other companies.
Amazon Prime Air operates from 21 airports in the United States as of 2019.
The fleet size increased from 20 to 50 planes between 2015 and 2019.
Amazon processes and delivers 26% of their online sales without third-party help.
Amazon estimates savings of $2 to $4 per package with Prime Air.
Morgan Stanley estimates Amazon could save $1 to $2 billion in shipping costs in 2019.
Amazon opened a $1.5 billion air hub in Cincinnati in 2021.
Amazon's two-day shipping guarantee for Prime members increased customer base by over 17%.
Amazon's deal with USPS was criticized, leading to a push for more independent logistics.
Amazon ordered 20,000 vans and expanded the delivery service partner program in 2018.
Amazon's supply chain includes 185 fulfillment centers for Prime-eligible items.
Amazon aims to reduce delivery times with advanced methods like Scout robots and drone delivery.
Amazon's drone delivery program has been in development since 2015.
Amazon's Shipment Zero initiative aims for 100% carbon-neutral shipping by 2030.
Amazon is pioneering in the e-commerce and logistics industry, aiming for faster and greener deliveries.
Transcripts
amazon is the largest online retailer in
the world which makes them the largest
shipper of goods in the world their
reliance on ironclad logistics
operations is crucial for their success
in 2014 Amazon spent eight point seven
billion dollars in shipping costs for
eighty eight billion dollars worth of
products it was on realized that as the
company's sales grew exponentially so
would shipping costs and they were right
in 2018 those shipping costs grew to
twenty seven point seven billion dollars
on the two hundred and thirty three
billion dollars worth of products in
order for Amazon to cut down on their
shipping expenses they need to innovate
their shipping operations and that is
why on November 1st 2015
Amazon Prime air was launched Amazon
owns the delivery service using Amazon
branded aircraft however the fleet is
operated by Air Transport international
ABX air Atlas air and southern air these
companies take care of the day-to-day
operations of the air fleet from their
pilots planes schedules and maintenance
the service began in Seattle where
Amazon headquarters is based out of then
they quickly spread throughout the
United States there are 21 airports that
Amazon Prime air operates out of as of
2019 also from the 20 planes they
started with in 2015 they grew to 50 in
2019 with 25 more on order with Boeing
as of mid 2019 Amazon processes ships
and delivers 26% of their online sales
without the help of third-party
companies and that number is expected to
grow as the prime air fleet grows Amazon
estimates that it saves around two to
four dollars per package at destination
if packages are handled by FedEx UPS
USPS will cost around nine dollars per
package Morgan Stanley estimates that in
2019 Amazon will save around one to two
billion dollars in shipping costs by
handling its own shipping prime air
keeps moving fast Amazon will open
a 1.5 billion dollar air hub in
Cincinnati Northern Kentucky
International Airport in 2021 it will
have the capacity for 100 planes double
the number of its fleet now and we'll
plan to schedule 200 flight landings and
departure each day when Amazon started
the highly attractive two-day shipping
guaranteed to Prime members it grew its
customer base by over 17% this attracted
a lot of eyeballs on how Amazon can meet
that commitment and be profitable at the
same time a lot of people speculate that
Amazon made a very favorable deal with
the United States Postal Service where
they were paying below average rates
this leads people to believe that USPS
was losing money because of it someone
that has been very critical about this
deal is President Trump after president
Trump's attack on Amazon's deal with the
post office
Amazon felt more inclined to develop
their own logistics network more so they
could rely on the post office less in
the future one huge hurdle that amazon
has encountered is that the USPS has a
long reach overall the United States the
USPS handles the very remote homes where
it would not be economically feasible
for Amazon to have shipping
infrastructure in this is the main
reason why Amazon relies so heavily on
the USPS Amazon wants to take more
control of their supply chain management
that's why Amazon ordered 20,000 vans
and 2018 and contract drivers to do the
final step in the delivery system to
land the package on the doorstep also to
meet delivery deadlines the company
expanded the delivery service partner
program which offered current Amazon
employees with $10,000 in three months
salary to start their own logistics
company and deliver Amazon packages the
partner program first announced last
year includes access to Amazon's
delivery technology hands-on training
and a suite of other discounts in assets
and services like vehicle leasing and
insurer
to get a better understanding on how
Amazon customers get their packages it's
important to explain every step in the
Amazon supply chain management items
eligible for prime shipping are kept in
one of 185 fulfillment centers across
the United States once the order comes
in employees pack the items into Amazon
shipping boxes the package is then put
in a bin where it is loaded onto a
semi-truck heading to the closest
primary hub the airplane will fly to one
of 21 airports that Amazon Prime air
operates out of once the airplane lands
the bins are uploaded and packages are
sorted by location then they are
transferred to FedEx UPS USPS or an
Amazon partner for delivery to its final
destination in April 20 1999 set they
were slashing delivery time in half for
more than 10 million of their products
one-day shipping was going to be made
available to large cities and eventually
spread down to smaller cities this move
is definitely going to put a strain on
the shipping industry in order for
Amazon to meet this ambitious goal prime
air will need to grow Amazon has began
testing more advanced delivery methods
like Scout sidewalk robots in Los
Angeles and London it's testing out a
program called shipping with Amazon
sellers who have used the service say
amazon offers shipping rates at half the
price of UPS the most anticipated is the
drone delivery if you live within 10 to
20 miles of amazon's fulfillment centers
they will be able to send a drone with
your package as long as it weighs less
than 5 pounds it will be on your door in
less than an hour the drone program
being in the works since 2015 when it
was announced has been a challenge for
Amazon engineers to get everything right
Amazon says that they are close to
having a working program amazon's future
mission for prime air is not only
extremely ambitious with plans to make
deliveries even faster than today but to
do it 100% carbon-free Amazon launched a
new initiative that wants its shipping
to be done 100% carbon neutral the
initiative
called shipment and zero and their
immediate goal is to lower the carbon
footprint by 50% before the year 2030
currently their facilities are powered
by solar and wind power but only a
portion of their energy consumption is
complemented by renewable energy in
addition to the electricity consumption
provided by conventional means in
regards to the actual shipping of the
packages the development of electric
semi trucks like Tesla's and the use of
biofuels and airplanes can help Amazon
reach this goal Amazon is a pioneer in
the e-commerce industry and they are
revolutionising the logistics industry
as well as society becomes more
demanding one day shipping is not going
to be enough we're going to want to have
our purchased products in our hands
within hours or minutes of us pressing
the order button Amazon knows this and
will come up with new ways to improve
their delivery times and what method
they used to do so the sky's the limit
for Amazon literally what do you think
of Amazon's logistics system what method
of delivery do you think Amazon should
look into to improve their delivery
times do you think that they will take
the place of the post office post your
comments in the comment box below if you
like this video what are you waiting for
like and subscribe so you can watch more
content like this in the future thanks
for stopping by this has been informed
society and as always stay informed
浏览更多相关视频
5.0 / 5 (0 votes)