September 28, 2021

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Life With Business

Logistics: What Type of Logistics is Amazon?

3 min read
Is Logistics About To Get Amazon'ed? | TechCrunch

Logistics is incredibly important when you are planning to build your own business since it is the process of planning and executing transportation and the storage of goods from one point to another in the most effective and efficient way possible. This would provide the service to manufacturers, retailers, and all of the other industries that need to transport goods. Sure Logix LLC – Transportation, Warehousing, and Logistics Company is a logistics company that would be able to help you out with that. 

There are a lot of Logistic companies that are well known, like FedEx, UPS and DHL. Keeping those in mind, people tend to question whether Amazon could be considered one of the largest logistics companies in North America? Yes.

So, what type of logistics is Amazon?

What is a logistics company?

Logistic companies are the ones that are in charge of planning, implementing, and controlling the movement and the storage of goods, services and information that is within the supply chain and the movement between the points of origin and consumption. There are a ton of different logistic companies that are handling some and/or all of these supply chain functions. This would depend on the client’s logistics needs.

Amazon is estimated to have provided logistic services for over 12 percent of business-customer shipments worldwide, according to Evan Armstrong who is the president of Armstrong & Associates Inc who is a company that does logistics industry research and consulting. He also noted that the third-party sellers account for more than half of the sold units through the Amazon Platform.

It is known that Amazon has built an enormous network of warehouses and distribution centers in order to serve all its customers. At the moment, they have about 386 facilities in the United States alone. This number includes 156 fulfillment centers, 47 inbound and outbound sortation hubs, 52 Prime Now hun, and about 115 local delivery stations. This was all according to the data that MWPVL International, a Montreal-based research firm, had compiled over the years. Worldwide, Amazon has about 850 facilities in 22 countries that occupy about 220 million square feet.

Is Amazon a retailer logistics or technology company?

You really can’t say since they offer several logistics services. These include a signature program called “Fulfillment by Amazon” where sellers ship goods directly to Amazon facilities where all of the products are stores, and this also happens to be the place where Amazon personnel arranges for transportation to customers, and in return commission about 15 percent of the sales price of each other the items that were sent per unit fulfillment fees, and monthly storage fees.

Amazon is one of the only few logistics companies that offers international transportation management services making them the biggest logistics company in the world. In fact, as of recently, Amazon actually added a service called the FBA Onsite where the company would take on the management of inventory in non-Amazon warehouses.

But in the end, Armstrong put Amazon in the same category as a third-party logistic firm because logistics is just actually part of their business, and is in fact, not just the business itself. It is estimated that Amazon had generated about 42.5 billion dollars in gross revenues from logistic services itself worldwide last 2018 by Satish Jindel, the owner of SJ Consulting Group which is an industry research and consulting firm in Warrendale, PA.

Jeremy Bowman, who is an analyst that follows Amazon at The Motley Fool which happens to be an investment firm in Alexandria, VA., said that logistics is a huge market that has a global revenue projected to reach about an estimated $15.5 trillion dollars by 2023 according to the Transparency Market Research. Though Amazon isn’t necessarily intentionally targeting all of the markets, the company is currently homing in on an industry that is huge and directly connected to the e-commerce business.

Amazon Shipping, according to Bowman, resembles Amazon Web Services which was originally developed as an in-house project and would be able to serve its own e-commerce needs. But now, Amazon Shipping is the biggest enterprise cloud business in the United Stated by adoption, gaining about an operating profit of $7.3 billion dollars last 2018.

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