Amazon Logistics: What Is It and How to Master It

Melissa PrestiAmazon Business, UncategorizedLeave a Comment

drone delivery

Amazon Logistics: friend or foe? For even the most experienced seller and Amazon customer, the answer to this question is a moving target. The results vary not only by seller, but also by the quality of service from each delivery provider.

If you aren’t familiar with Amazon Logistics, we’re going to breakdown the details behind this shipping option. We’ll weigh the pros and cons and offer a few solutions for FBA sellers to implement.

The Basics

In 2015, Amazon started rolling out the Amazon Logistics shipping service with 2 goals in mind: reduce shipping time and increase customer satisfaction. You probably know this better as the same-day delivery option. If you thought Prime was a mind-blowing concept, you haven’t yet experienced the thrill of putting an item in your virtual shopping cart and having it arrive at your doorstep 2 hours later. On a Sunday.

Speaking of Prime, this elite shipping service comes free of charge as a Prime member perk. It’s available for non-members, but they must be willing to pay a little extra. It’s only available within Amazon’s designated service areas which, luckily, are expanding every day with new fulfillment centers popping up all over North America and the UK.

In the ecommerce world, this is an anomaly that continues to disrupt traditional shipping logistics. Rather than replacing carriers such as FedEx and UPS, Amazon claims their shipping service simply offers an alternative solution for customers in a hurry.

However, this appears to be only the beginning of Amazon’s expansion into express delivery domination. Increasing speculation that it could potentially compete with traditional carriers is something to keep our eye on. Let’s dig into the operations a bit more…

How does it work?

Much like the Uber car-share business model, Amazon Logistics relies on third party contractors to run this service, but with a few more professional requirements. There is no cost to become an official Amazon Delivery Provider, but the individual or company must meet the following criteria:

  1. They must be fully licensed with both commercial and automotive insurance, workers compensation, and Cargo Legal Liability. In other words, they are an established last-mile delivery company.
  2. The company must have trained and experienced drivers with documented driver safety training and policies in place.
  3. The company must have professional cargo vehicles. This means each cargo van or truck must be able to hold at least 300 cubic feet of goods. (Depending on location, walkers, bicyclists, and motorcyclists may also be an option)

It sounds like Amazon is crossing their t’s and dotting their i’s but as with any contracted third-party, there is never enough oversight to guarantee the service will be performed to the highest degree of Amazon’s (and their customers) expectations. 

Delivery Providers enjoy the flexibility to choose the cities where they would like to deliver and their hours of service throughout the day. This includes early mornings and late evenings, 7 days a week. They even use routing technology provided by Amazon to navigate their deliveries. But aside from wearing the Amazon logo on their shirt, they’re operating completely independent.

Note: all shipments from Amazon Logistics appear in tracking as AMZL_US. Packages with this designation are then sent to a local sorting center where they are picked up by Delivery Providers.

This is creating a huge shift in the shipping landscape because it depends so heavily on the gig economy to deliver the last mile. (gig economy = independent contractors who are outsourced for on-demand jobs and public services) It’s the new business model for efficiency, but it doesn’t come without its pitfalls.

package-delivery

How do FBA sellers benefit from it?

Honestly, this depends on how actively hands-on you are with each of your customers. Most sellers aren’t even aware of the shipping method selection and trust that each carrier will follow through. As long as you have a follow-up process in place for feedback and review requests, there’s not much else you can do to affect the delivery status.

Not to mention, any negative seller feedback or reviews in direct relation to the shipping experience and expectations are immediate grounds for removal. Thus keeping your reputation intact. However, it’s still important to stay ahead of any service that could be a hit or miss for the customer.

Consumers know what to expect with FedEx, UPS, and the good old US Postal Service, but the promise of same-day delivery undoubtedly raises their expectations. Amazon is still a customer-first company, which means you, the third-party seller, are not always the intended beneficiary of these types of services Amazon continues to roll out.

Let’s talk about the pros and cons

Pros:

  • Your products are given the fastest delivery options which allows you to tap into programs such as Lockers, Fresh, Flex, and Prime Air to offer expedited service. Same-day and even 2-hour shipping are available in specific geographic locations (more on those below!)
  • This year Amazon added a new map tracking feature to Amazon Logistics. Now customers can follow the journey of their package and even receive photo confirmation of the delivered parcel on their front porch.
  • When other carriers are slowing down due to seasonal and other high shipping volume variables, Amazon Logistics can keep up with demand and avoid overcrowding in the warehouses.
  • The combination of external partners and internal teams allows for global growth (expands the marketplace for your products) and new initiatives like the ones below –

Amazon Lockers: Secure, self-service kiosks where customers can pick up Amazon.com packages at a time and place that is convenient for them. Option available during checkout for select cities.

Amazon Flex: A courier service in 50+ US cities, offering same-day delivery. Couriers only need a car, smart phone, and simple background check to start delivering.

Amazon Fresh: A grocery delivery and pickup service available exclusively to Prime members in select cities.

Prime Air: A delivery system from Amazon designed to safely get packages to customers in 30 minutes or less using unmanned aerial vehicles, aka drones.

Cons:

  • Sellers cannot pick and choose which delivery provider will be shipping their goods. This means any negative experiences with a provider could potentially be repeated.
  • As of now, Amazon Logistics operates without seller input guiding their policies and procedures. This could be neglecting insightful suggestions to improve the process.
  • Based on reviews across the internet, many of these independent delivery companies do not always follow the proper protocol if a package is undeliverable. The dreaded “return to sender” is enforced with little explanation for the delivery mishap, and lost packages marked as “delivered” are head scratchers.

fulfillment-center

What can you do to reduce the risks of using Amazon Logistics?

Your sales and reputation are always at stake. The best plan of action is to be as proactive as possible from the point of sale through the delivery.

  • You have the option to implement an automatic messaging system to request seller feedback immediately upon receiving your product. As soon as a package is marked as delivered, trigger that message!
  • Make sure your customer always has multiple options to contact you. If they know you’re there to help with any unsatisfactory service, any shipping errors won’t be a reflection of negligence on your part. Provide them with as many links as possible – tracking link, Amazon storefront link, feedback link, etc.
  • Sellers can try reaching out to customer service to deprioritize Amazon Logistics as their least preferred shipping method. This may push customers toward other shipping options. On the flipside, customers can request this as well if they are unhappy with the service.

For sellers, this means communication is key with your customers. If you begin implementing these suggestions, you can ahead of any disappointing experiences and still benefit from all of the positive intentions for the Amazon Logistics service.

What’s the future of Amazon Logistics?

As we progress into 2018, it looks as though Amazon is only continuing to build a bigger and denser shipping network in direct competition to major national carriers.

Analysts say it could take decades to take over the competition, but if these logistical leaders can’t keep up with the innovative platform that Amazon is building, we could witness an inevitable takeover on the fulfillment front. If Amazon is already providing drone deliveries, then anything is possible! Their operational strategy could even expand into freight forwarding until they are hand-holding your product from start to finish.

Handling a larger volume of deliveries ultimately gives Amazon greater control over each step of their supply chain, and allows them to meet the demands of their own growth. At the end of the day, they are scaling their business just like you and I.

Author: Melissa Presti

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