2.3. Consolidation and Integration
To begin with, increasing direct control of delivery vehicles permits Amazon to push forward regarding development and separation, including how to improve connection and better interface programming on the scanner to Amazon 's IT (Oliver Wyman, 2016). Second, Amazon is building administration experience for sorting focus operations and a possibly outsourced delivery, which could permit it to scale operations up at the right places basically urban areas at the right times probably organized with the opening of nearby stockrooms (Oliver Wyman, 2016). Amazon Logistics is not about creating a logistics company, it is about supplementing, but rather it is about growing the capacity for quick delivery (Jinks, 2016). It is additionally about meeting the requirement of the companies in business, numerous products of what we do in whatever is rest of the year. That is something that nobody bearer can meet, nobody transporter can go from taking care of 20 times the volume over a time of only a month (Jinks, 2016). Given the way that delivery charges rose 32% in one quarter, the transportation charges on its plausible $102bn income for 2014 were, at our prior, extremely conservative, gauge in any event $9.1bn (Jinks, 2016). Obviously Amazon Logistics works well in the US as in the UK for the fact that by removing FedEx Smartpost surface mail Amazon accomplished savings of 75% (Jinks, 2016). As we will see later, running a delivery organization
The report presents a case about AMB, which is a leading pension real estate advisory firm that has recently proposed to turn itself into a publicly traded Real Estate Investment Trust (REITs) and is planning to persuade its client to contribute their real estate assets to create a new REIT. Furthermore, the report also includes considerations of Anne Shea, who is the Assistant Vice President at Curator’s Fund; which is considering exchanging her shares in the commingled fund for the shares in the REIT.
This sort of global expansion adds great complexity to the functionality of Amazon’s management, personnel, operation systems, technical performance, financial resources, and internal financial control and reporting functions. With the perplexity of current situations, Amazon may not be able to sustain growth effectively, which ultimately could bring damage to their reputation and limit their operating growth as well. .
DHL 31%, USPS 8%, FedEx 27%, and Amazon 3%. From these numbers Amazon is a very small player in the shipping department. Every competitor, expect DHL, are currently shipping the excess freight that Amazon cannot maintain. With Amazon 's move to acquire more of the market, these competitors need to be on the lookout because portions of their market share can be taken away. These major shipping firms only provide shipping services not offering household products like Amazon. With Amazon starting by semi-supplementing their shipping avenues, Amazon has the potential to grow even larger. The market cap numbers are not a good basis to judge market share on since FedEx and UPS have the majority of the market in the shipping industry. FedEx and UPS are the major competitors against Amazon and its new shipping department. FedEx and UPS had the most recent annual net income of $50.3 billion and $58.3 billion respectively. They represent the majority of packages delivery from individuals, businesses, and online retailers.
United Parcel Service (UPS), is the world’s largest express package delivery firm that handled more than 4.7 billion packages and documents in 2015. This global transportation and logistics service provider operates in more than 220 countries, and offers an array of supply chain management solutions (UPS Fact Sheet, n.d.). The firm has diversified its products and/or services to include freight forwarding and logistics services via air, ground, rail, and sea. U.S. Domestic Package operations, International Package operations, and Supply Chain and Freight operations are the three operating segments UPS. Through technology advancements UPS delivers online package tracking, e-commerce services, and specialized
Amazon’s core competencies are in its ability to effectively use and develop technology to drive site traffic and enhance the customer experience. Their distinctive use of website real estate coupled with their ability to leverage their brand and effectively use that leverage to deliver low prices and high quality products, makes them a leader in online retailing. Their partner brands and their ability to adapt and recognize deficiencies enable them to effectively cut out the middle man, or at the very least, partner with them.
In the short term, Amazon’s drone delivery could cause some supply chain risk. There could be a lot of risk associated with any completely computerized robot. These robots will be operating based on gps coordinates to find their final destination which is the end consumer. Upon delivery, these drones will either be dropping items or parachuting them onto the customer’s property for them to pick up at their convenience. This could cause serious risk in case a package was accidentally dropped on someone or even if these packages were dropped off in the wrong location other than the guest’s actual property. These drones could also have the possibility to break down mid trip and be lose on a map which could cost the company a lot of money. When a drone is delivering to a very urban area with a lot of people around, there could be problems associated with delivering to the exact address and could cause some theft problems if left at the wrong doorstep. With all of this said, Amazon has been working on these drones for years now in order to prevent all of these mishaps from happening. By the time the product launches, it should be able to limit the supply chain risk within the organization.
The basic Amazon sales channel is the web store front- end which serves as their core business. Customers go to the Amazon.com website, browse products, and place orders. Amazon is responsible for all front-end customer relationships and back-end logistics in this model. Once an order is placed, Amazon decides which internal distribution center or drop shipper should be responsible for shipping the order to the customers. After that, Amazon will responsible for coordinating the fulfillment of the order. When products are sourced from its internal distribution centers, then Amazon start to picks, packs, and ships the order. When products are sourced from a drop shipper, such like a book distributor, the distributor packages the products by using the Amazon box delivers it to the customer (Maltz et al., 2004). This model requires Amazon to maintain or purchase inventory for immediate selling. In this model, Amazon owns the customer relationship, provides the technology, owns or purchases the inventory, and executes the logistics as well.
Amazon.com has successfully managed to make its customers to feel that anything they could possibly want could be found on their website. Additionally, its products are marketed at a competitive price. Another important factor is their speedy delivery with their usage of UPS and FedEx (United States) and Royal Mail (United Kingdom). The company also caters for people that prefer online shopping with extra services such as Amazon Prime - a service with a yearly payment, customers are eligible for free next day delivery. Even though Amazon.com is known to be an online seller of most things, it still excels in its original market of book selling. Evidence of such is
Amazon.com is a Fortune 500 company that has revolutionized the retail industry. In recent years, Amazon has faced increased competition in the highly competitive online retail space as competitors invested heavily in their online storefronts and infrastructure. Positioned in a highly fragmented industry, Amazon must find solutions that can sustain its long term profitability and maintain its market share. To that end, Amazon should grow the Amazon Prime membership base and expand on its media and mobile offerings.
United Parcel Service, a logistics company has established itself through its strong corporate culture, continuous ability to innovate, and its far-reaching global network. The company has maintained a competitive advantage over the years by implementing continuous growth strategies—the first was geographic expansion, next the early adaptation of electronic tracking technologies, and then came a series of acquisitions. Although UPS is financially strong and is able to maintain its role in the courier and delivery industry—it is vital that UPS continue to act strategically as to strive for long-term success. UPS is heavily dependent on the U.S. economy and it is important that it find greater and more profitable ventures
Providing customers more of what they want - low prices, vast selection, and convenience - Amazon continues to grow and evolve as a world-class e-commerce platform. “When you order products from Amazon, it arrives on your doorstep in two days, but people don’t think about how.” said George Prest, CEO of a logistics trade group.
Amazon currently has the objective to form a strategic move focused on growing business with UPS, U.S. Postal Service, FedEx, and obtain better prices for shipping. Bezos has given a statement clarifying that Amazon is creating a delivery network that added to—and did not replace—those of FedEx, UPS, and the U.S. Postal Service. In an interview he said, “It’s not that we are trying to take over. No, in fact what we want … Well, we’d always like better prices” He then completed his statement with, “We will take all the capacity that the U.S. Postal Service can give us and that UPS can give us and we still need to supplement it. So we’re not cutting back. We are growing our business with UPS. We’re growing our business with the U.S. Postal Service.” It is hard to enter an existing market but Amazon plans to maximize the market share it currently captures. To ensure this, they are Leasing 20 Boeing 767s from Air Transport Services Group this march. Amazon has negotiated an option to buy nearly 20 percent of the company. Dave Clark, Amazon’s senior vice president for worldwide operations, stated, “We’re excited to supplement our existing delivery network with a great new provider, ATSG, by adding 20 planes to ensure air cargo capacity to support one- and two-day delivery.” In an attempt to facilitate their shipping routes they have also leased 20 more jets from Atlas Air, an air cargo company based in N.Y. and purchased 4,000
Trends and opportunities of the parcel service industry include globalization, e-commerce, and supply-chain management. Internet logistics was FedEx and UPS’s fastest growing business. The internet enabled customers to link directly to retailers and their manufacturers. In 2001, parcel carriers served almost all of the online market. They were able to provide information on packages to customers through tracking systems on the web. This allowed customers to plan ahead and decrease delays in deliveries. It also allowed for faster transactions and lower communication costs. Parcel companies created partnerships with large Internet retailers. These partnerships allowed parcel service companies to expand its overall delivery volume. Parcel companies improved tracking by implementing several technological innovations. These included “laser scanners and bar codes, state of the art software programs, satellite and cell phone communication equipment, electronic information interchanges, and the Internet.”
Also, Amazon has emphasized on building “several distribution centers around the world to hasten deliveries”(Hof and Himelstein, 1999). Coupled with its software it provides a “laser-like focus on the buying experience”(IT Business Edge, 2012). Such a system and service is what draws customers towards Amazon and subsequently retains them.
Amazon’s fulfillment centers are valuable, rare, costly to imitate, and organized to captured value. Thus, they attribute to Amazon’s competitive advantage. Amazon Prime and 1-Click are also valuable to the organization. However, they can be replicated. Walmart launched a membership program to compete with Amazon’s Prime Service. With Walmart’s membership program customers receive free two-day shipping when they spend $35 or more on orders. Amazon Web Services is valuable, rare, costly to imitate and the organization has capture the value of it. Therefore, AWS has contributed to Amazon’s sustainable advantage. Amazon’s brand name and reputation have also given the company sustainable advantage. Amazon acquired enormous brand valuation in a short period of time. It is