According to the Harvard Business Review, “Inventory management and transportation are the most critical factors in business success.”
In other words, poor logistics can be a contributor to your online business failing. Considering the rise in e-commerce sales and dynamic consumer trends, business owners need to upgrade their logistics to boost online sales.
Online retailers, Amazon, Walmart, and Target are always conquering the ecommerce industry.
Turns out, logistics is the secret weapon of the business success of these ecommerce giants.
Amazon proves how having smart logistics is significant to scaling your online store.
What is Amazon Logistics?
Amazon Logistics is a shipping and delivery service that works in tandem with current providers like FedEx, UPS, and USPS. Amazon Logistics tracking numbers typically begin with “TBA…”
It is more of a “last mile” shipping service. The goal is to deliver packages to the customers on time. On the surface, it does the same work as other national post services.
But it isn’t a big corporation like FedEx.
Instead, it’s a technology-driven network where Amazon is the purchaser of independent delivery services, and individuals are the vendors.
The delivery service is offered by:
Delivery Service Partners, also known as independent delivery services, who have their vans and drivers to deliver shipments for Amazon.
Individual drivers who utilize Amazon Flex to deliver shipments.
Note that these delivery types are not carried out by Amazon’s own employees. Instead, they are under a contract with Amazon and work to meet the standards of the company. It’s a similar concept to an Uber or Lyft driver.
Amazon’s Secret Strategy to Ensure Timely Delivery
Amazon’s logistics strategy will likely outpace other popular national delivery services soon. We’ll take a closer look at how Amazon’s powerful logistics is delivering to customers at the right time.
Physical Plant Expansion
Unlike other e-commerce marketplaces, Amazon is known to take ownership of the goods sold over its platform. CNBC notes that the company delivered 66% of its own packages.
Turns out, Amazon has been expanding its physical plant for some years now to include more trucks and planes.
As such, the company can decrease – for the most part – the unexpected escalating shipping costs that would otherwise come with XYZ shipping companies.
What’s more, Amazon is continuing the process of building its own physical plants and fleets to ensure maximum business growth.
Amazon Freight
The ecommerce giant knows how to deal with heightening consumer demands. Amazon has set multiple modes of transportation, including trucks, planes, ships, and vans.
The company continues to move forward by expanding the freight platform. For instance, the company currently has a fleet of more than 50,000 trailers.
Besides, the firm has established 450 additional amenities across the United States to hold and transport goods.
Keeping Track Of Inventory
Amazon outsmarts other retail outlets when it comes to keeping track of inventories. The company’s employees work hard against the supply chain and transportation issues.
They keep track of customer demands and are willing to balance their needs. As such, they keep their warehouses chock-full.
So whether it’s a holiday season or another event that boosts sales, Amazon rarely disappoints its customers with out of stock items or late delivery services. Perhaps this explains why more people prefer to shop from Amazon.
Why Did Amazon Launch Its Logistics?
The answer to this is pretty straightforward. Since timely delivery is one of the contributing factors to increased online sales, the reverse can hinder a businesses’ growth.
Nothing turns a customer away like an unreliable and disorganized shipping service. Studies show that 69% of respondents are much less or less likely to shop with a retailer in the future if an item purchased is not delivered within two days of the promised date.
So, late deliveries not only reduce customer retention rate, it decreases the customer lifetime value, too.
Typically, the seller controls everything, and in doing so, they can encounter a few unwanted situations.
- XYZ shipping companies who deliver their own way.
- Traffic conditions
- Vehicles meeting an accident.
- Customers who aren’t home during the time of delivery.
Amidst all, several things could go wrong, and perhaps this explains why most customers have concerns regarding the shipping – if not the product.
Damaged products, inconvenient delivery time, late deliveries can repel even the most loyal customers away.
Amazon logistics, on the flip side, takes care of the delivery process. The company controls and manages the shipping process through technology. Besides, it addresses customer concerns.
Fortunately, Amazon manages their product replacement and customer support in case of damage or lost items for sellers that use FBA (Fulfillment by Amazon).
Adverse Effects of Poor Logistics
Proper logistics are a must for e-commerce businesses, and Amazon has made it clear. Let’s highlight a few drawbacks of having poor logistics.
Negative Online Reviews
Did you know 93% of consumers read reviews to make a shopping decision? A bad shipping experience will add to a bunch of negative reviews on your website.
It won’t only leave a negative impression on your current customers, but you’ll hardly get new conversions.
Increased Costs
If your customers receive a damaged/defective product, they’ll return it instantly. Who is to blame here? The shipping service, of course.
Such returns increase the costs for your brand. You need to deliver a new product, and you’ll be paying from your pocket – for the product and the logistics.
Pressure on the Customer Support Team
Since the customer support team is expected to handle everything – including the dissatisfied customers – a few late deliveries can put excessive pressure on the customer support team.
This might hurt your online business in the long run.
Reduced Customer Loyalty
Nothing can compete with the effort that goes into acquiring one loyal customer, and a single flawed delivery can be enough to enrage your customer.
There’s a reason why a particular person is purchasing from your brand. If you fall short to meet their expectations, you’ll likely lose them.
Even worse, gaining new customers becomes an uphill battle.
Conclusion
You can offer enticing holiday deals and quality products, but if you fail to deliver on time, very few would be willing to purchase from your ecommerce store again in the future.
Logistics is the key to building loyal repeat customers, amassing a following, increasing brand awareness, and boosting sales. Amazon sure has set the bar high.
