Home
Forums
New posts
Search forums
What's new
New posts
Latest activity
Members
Current visitors
Log in
Register
What's new
Search
Search
Search titles only
By:
New posts
Search forums
Menu
Log in
Register
Install the app
Install
Home
Forums
The Competition
FedEx Discussions
Amazon to use HD and Ground instead of Express
JavaScript is disabled. For a better experience, please enable JavaScript in your browser before proceeding.
You are using an out of date browser. It may not display this or other websites correctly.
You should upgrade or use an
alternative browser
.
Reply to thread
Message
<blockquote data-quote="Ricochet1a" data-source="post: 1130645" data-attributes="member: 22880"><p>Amazon is changing the method by which it warehouses and ships their product. </p><p></p><p>Amazon until recently, made a deliberate plan to keep from placing a physical presence in as many states as possible. This enabled them to NOT charge sales tax on orders placed in those states which didn't have a physical Amazon presence - giving them a small competitive advantage over "brick and mortar" retailers. The downside to this strategy was that shipping charges to Amazon were somewhat higher than if they had numerous centers throughout the US. This was mitigated to a large extent by the VERY large amount Amazon ships (volume gets the discount). </p><p></p><p>Amazon is in the process of building distribution centers in a number of states where they previously had no physical presence. Most of these centers are located in the mid-west, some are located in areas in the south and northeast. Amazon cut deals with the governments of the states in which they are building distribution centers, to either give them tax breaks on the physical locations (property tax), breaks on collecting sales tax on 'in state sales' for a period of time, and other tax incentives. Bezos read a chapter from the "Book of Fred"...</p><p></p><p>When a customer places an order with Amazon, a process much like the process of how an Express package is routed is undertaken by the Amazon computerized order fulfillment software. In Express, the powerpad automatically routes a shipment by a series of 'logic parameters', that steps through all available potential routing options. The initial potential routing chosen is if the shipment is intra-market (the ASTRA generates with the twin digit prefix that is unique to each of the Express market areas). Then if the shipment CANNOT be moved intra-market, then the next potential routing that involves only ground movement of volume (ramp to ramp, or ramp to hub via CTV). Everyone knows the ASTRA prefixes for these shipments, most often they are used on non overnight volume which is moving between large markets. The next routing alternative is whether the package can be moved through a regional hub. Finally, if all these alternatives are exhausted, routing through Memphis is done. </p><p></p><p>Amazon is going to use a similar system for filling its orders. When a customer places an order, their software will look at the customer's ZIP code and the shipping speed which the customer chose, then go through a series of logic parameters to determine if a distribution center near the customer can fulfill the order (and get it to the customer in the time parameter chosen). If the software determines that the order can be filled by a local distribution center (and meet the time parameter), the local center will pack and ship the order. If the local center doesn't have the particular item in stock, then the software will automatically look for the next nearest center and determine if the order can be shipped and arrive in the time parameter determined by the customer. This process of checking and verifying is continued until the order can be filled. </p><p></p><p>By building these regional distribution centers, Amazon will be able to use ground methods of shipping their products more and more, and STILL meet the 2 day time parameter of their "Amazon Prime" option. Their computerized inventory control determines what market demand for a particular product is, and whether it is cost efficient to have a particular product stocked in a regional distribution center, or whether to just keep it in one of the current 'mega' distribution centers. As market demand for a product fluctuates, where to warehouse inventory can be adjusted to be most cost efficient. </p><p></p><p>So yes, volume is going to be pulled off of Express, and placed onto Ground, BUT FedEx isn't the one doing the shifting, it is Amazon. The process will be gradual (with the completion and stocking of the regional distribution centers), but there will indeed be a slow, deliberate removal of volume off of Express and onto other more cost efficient methods of delivering. </p><p></p><p>The other kicker is that Amazon is already using regional delivery options (OnTrac is a common one in the western US) </p><p></p><p><a href="http://www.ontrac.com/" target="_blank">OnTrac Shipping - Overnight Delivery for Less in CA, AZ, NV, OR, WA, UT, CO & ID</a> </p><p></p><p>These services charge less than FedEx would even for ground service, and have acceptable on time performance. The Amazon software automatically prices shipping costs to their available shippers, and automatically chooses the cheapest alternative - thus why Amazon uses a variety of different shippers from a single location. </p><p></p><p>With the high cost of air cargo (due to fuel expense), more and more distributors of physical product are going to a regional (and some even state by state) method of inventory warehousing and distribution which can have orders shipped by ground methods of transportation. There is no sign of fuel costs going down (wrote about this a month or so ago), so corporations are adjusting to meet the 'new normal' in shipping expense. With the cost of fuel what it is, it is more cost effective for companies to have distribution centers 'spread out' across the US, instead of relying on less than a handful of centers to meet all market demand (utilizing air cargo to get product delivered to more distant locations on time). </p><p></p><p>There is a 'synergy' of forces combining to reduce utilization of air cargo - those who don't realize this fact at this date are either deluded or naive. You'd best be served in planning a line of work recognizing the changes which are afoot.</p></blockquote><p></p>
[QUOTE="Ricochet1a, post: 1130645, member: 22880"] Amazon is changing the method by which it warehouses and ships their product. Amazon until recently, made a deliberate plan to keep from placing a physical presence in as many states as possible. This enabled them to NOT charge sales tax on orders placed in those states which didn't have a physical Amazon presence - giving them a small competitive advantage over "brick and mortar" retailers. The downside to this strategy was that shipping charges to Amazon were somewhat higher than if they had numerous centers throughout the US. This was mitigated to a large extent by the VERY large amount Amazon ships (volume gets the discount). Amazon is in the process of building distribution centers in a number of states where they previously had no physical presence. Most of these centers are located in the mid-west, some are located in areas in the south and northeast. Amazon cut deals with the governments of the states in which they are building distribution centers, to either give them tax breaks on the physical locations (property tax), breaks on collecting sales tax on 'in state sales' for a period of time, and other tax incentives. Bezos read a chapter from the "Book of Fred"... When a customer places an order with Amazon, a process much like the process of how an Express package is routed is undertaken by the Amazon computerized order fulfillment software. In Express, the powerpad automatically routes a shipment by a series of 'logic parameters', that steps through all available potential routing options. The initial potential routing chosen is if the shipment is intra-market (the ASTRA generates with the twin digit prefix that is unique to each of the Express market areas). Then if the shipment CANNOT be moved intra-market, then the next potential routing that involves only ground movement of volume (ramp to ramp, or ramp to hub via CTV). Everyone knows the ASTRA prefixes for these shipments, most often they are used on non overnight volume which is moving between large markets. The next routing alternative is whether the package can be moved through a regional hub. Finally, if all these alternatives are exhausted, routing through Memphis is done. Amazon is going to use a similar system for filling its orders. When a customer places an order, their software will look at the customer's ZIP code and the shipping speed which the customer chose, then go through a series of logic parameters to determine if a distribution center near the customer can fulfill the order (and get it to the customer in the time parameter chosen). If the software determines that the order can be filled by a local distribution center (and meet the time parameter), the local center will pack and ship the order. If the local center doesn't have the particular item in stock, then the software will automatically look for the next nearest center and determine if the order can be shipped and arrive in the time parameter determined by the customer. This process of checking and verifying is continued until the order can be filled. By building these regional distribution centers, Amazon will be able to use ground methods of shipping their products more and more, and STILL meet the 2 day time parameter of their "Amazon Prime" option. Their computerized inventory control determines what market demand for a particular product is, and whether it is cost efficient to have a particular product stocked in a regional distribution center, or whether to just keep it in one of the current 'mega' distribution centers. As market demand for a product fluctuates, where to warehouse inventory can be adjusted to be most cost efficient. So yes, volume is going to be pulled off of Express, and placed onto Ground, BUT FedEx isn't the one doing the shifting, it is Amazon. The process will be gradual (with the completion and stocking of the regional distribution centers), but there will indeed be a slow, deliberate removal of volume off of Express and onto other more cost efficient methods of delivering. The other kicker is that Amazon is already using regional delivery options (OnTrac is a common one in the western US) [url=http://www.ontrac.com/]OnTrac Shipping - Overnight Delivery for Less in CA, AZ, NV, OR, WA, UT, CO & ID[/url] These services charge less than FedEx would even for ground service, and have acceptable on time performance. The Amazon software automatically prices shipping costs to their available shippers, and automatically chooses the cheapest alternative - thus why Amazon uses a variety of different shippers from a single location. With the high cost of air cargo (due to fuel expense), more and more distributors of physical product are going to a regional (and some even state by state) method of inventory warehousing and distribution which can have orders shipped by ground methods of transportation. There is no sign of fuel costs going down (wrote about this a month or so ago), so corporations are adjusting to meet the 'new normal' in shipping expense. With the cost of fuel what it is, it is more cost effective for companies to have distribution centers 'spread out' across the US, instead of relying on less than a handful of centers to meet all market demand (utilizing air cargo to get product delivered to more distant locations on time). There is a 'synergy' of forces combining to reduce utilization of air cargo - those who don't realize this fact at this date are either deluded or naive. You'd best be served in planning a line of work recognizing the changes which are afoot. [/QUOTE]
Insert quotes…
Verification
Post reply
Home
Forums
The Competition
FedEx Discussions
Amazon to use HD and Ground instead of Express
Top