Amazon Fulfillment

free essayThe field of logistics entails mainly manual work and thus has proved to be inefficient in service delivery to different customers. Automation of this field would mean that companies in this industry would offer freight services at a faster pace and, at the same time, this would reduce the cost of delivering the goods. In his article “Is Logistics About to Get Amazon’ed?” published by TechCrunch, Zvi Schreiber discusses the entry of Amazon into logistics. The main argument that Schreiber presents in this article is that companies in the freight industry need to be up-to-date on matters of technology. He also adds that the entry of Amazon into this industry may lead to the deployment of an Amazon Logistics Services that would eventually make Amazon the leader of the freight industry.

The entry of Amazon into logistics has upped the competition and may change the freight industry in the nearest future. Such an entry has a huge impact on the industry, which means that international sellers, importers and end consumers will also be affected. Schreiber (2016) also adds that Amazon in the last two decades has changed its operating strategy from just being an online retailing platform to offering some critical infrastructure as a service (IAAS) to other businesses. Schreiber (2016) proves that this shift in the strategy has been driven by the company’s need to increase its share in the market and please its customers. Amazon has therefore defined a clear strategy that includes outlining inefficiencies in different industries, providing a technological solution to the inefficiency, transforming the technological solution into a platform, and eventually offering the platform as a solution to other third-party businesses. These strategies also aid in increasing Amazon’s share in the market and ensuring that its customers are satisfied (Schreiber, 2016). Through this structure, Amazon first outsources the necessary service from third parties before developing an in-house solution with the help of its IT team. Once the solution is tested and seen to be effective, it is then offered to the third-party businesses. The author provides detailed examples of how Amazon grew from an online retail store to a competitive provider of various services. The process started with Amazon offering critical packaging and e-commerce services, while the warehousing and the books themselves were provided by third parties. Through its IT department, Amazon successfully developed the e-commerce platform, which it finally deployed to different vendors, such as the Amazon Marketplace. Again, by following the same principles back in 2006, Amazon was able to improve technology in warehousing by developing Fulfillment by Amazon (FBA), a warehousing platform.

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Since 2014, Amazon has expanded in logistics by giving much more detail to inbound logistics than home delivery, which includes the sectors of logistics that were previously outsourced. Amazon has seen the inefficiencies in the global freight industry. About $1 trillion is spent on international freight each year. Amazon realized that this industry is largely manual and inefficient, and through its strategy, it can utilize this situation for its own benefit by employing advanced technology and cutting costs. The company made the first move by offering huge discounts for cheaper US import rates through outsourced consolidation. Due to its free shipping and lack of control over outsourced processes, Amazon has been able to please its customers. If Amazon succeeds in improving the service and reducing the costs of logistics, then this success will be shared with other companies operating in the logistics industry through Amazon’s platform. For the other companies to keep up with Amazon’s technological pace, they need to start innovating on their own. If they do not do so, Amazon will rise as a new leader in logistics.

Amazon extended its services into the freight business by purchasing a license to expand its ocean freight services. This means that it seeks to expand its market share in terms of packaging and delivering goods. According to Bishop (2016), Amazon means to take advantage of the inefficiencies in the freight industry so as to make a profit. To ensure that its entry into the freight business is successful, Amazon has purchased a small fleet of cargo planes (Phillips, 2016). This shows that Amazon is willing to lay a solid foundation in the freight industry.

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The article under discussion can be seen as an eye-opener to all the companies working in the freight industry. The author shows Amazon as a company that finds sectors that are ‘technologically challenged’ and finds solutions through innovative technology. The solutions are tested in-house, and if they appear to be successful, they are then open for other third-party vendors to use. This shows that Amazon is a big innovator. From the examples that the author uses to show how Amazon has offered the innovation of various services, it is clear that its entry into the freight industry will bring huge changes as far as technology is concerned.

The reason why I agree with the author’s argument that Amazon can become the leading company in the freight industry is that Amazon has been known to excel in areas where it was not expected. If the rest of the companies do not increase their competitiveness through innovative technology, Amazon will eventually become the market leader in using technology that would significantly cut costs in this industry, and thus, attract much more customers. During the appearance of ‘cloud computing’ in 1996, the big companies in the industry, namely IBM and Microsoft, did not expect that their main competitor would be Amazon (Saito & Goh, 2016). Thus, their entry into the freight industry may mean a shift from the manual and inefficient methods of delivering goods to those that are cost-effective through technology.

Lastly, Amazon’s entry into the freight industry will increase the market share that Amazon currently has. Amazon’s strategy shows that it automates each field that they entry. Automation in the freight industry would mean cheaper costs on Amazon’s part (Nuzio, 2016). This would positively influence Amazon’s sellers too. Easier and cheaper shipping for their sellers would revive and eventually increase Amazon’s growth that has been seen to stagnate since 2014. This would also provide Amazon with the control over the freighting processes. Developing technology would mean two great advantages: it would increase Amazon’s market share and, at the same time, improve their customers’ experience and increase satisfaction.