Known to be the biggest E-commerce company in the world, Amazon, the Seattle-based company, is expected to reach a whopping 729.76 billion USD in e-commerce sales worldwide by the end of 2022. Along with the E-commerce business, Amazon is also the creator of one of the most extensive cloud infrastructure services, which is responsible for 74% of Amazon’s operating profits and is the leader in the competitive cloud market.
With Amazon experiencing so much success in both the e-commerce industry and the competitive cloud market, one of Amazon’s significant goals of becoming the largest logistics company in the world is being overshadowed.
Let’s go back to the holiday season of 2013. Christmas of 2013 was one of the worst dates for Amazon. Numerous packages could not be delivered on time as UPS, the primary way Amazon delivered their products, was flooded with a jump of 37% in orders. Amazon had to give gift cards to customers who did not get their packages on time for Christmas. Since this “Christmas Delivery Fiasco,” as a WIRED article in 2013 described this event, Amazon has been building an army of infrastructure to facilitate and control how Amazon packages end up on your doorstep.
Since then, Bank of America Analysts have predicted that in 2019, Amazon delivered 58% of its packages on its own. This large sum made Amazon the fourth largest delivery service in the United States. Furthermore, by late August 2021, Amazon was estimated to have delivered 66% of its packages.
It turns out Amazon was not kidding when they said they would build an infrastructure army. According to an analysis by BigRentz, Amazon is currently operating 305 large fulfillment centers in the United States, and it is predicted that by 2023 they will have 355. Outside of the United States, Amazon presently has 175 fulfillment centers.
Amazon also operates many smaller warehouses that sort packages before they get delivered to your doorstep. According to MWPVL, Amazon operates 1,137 smaller fulfillment centers within the United States, and they hope to add 331 more. In addition, Amazon currently has a fleet of more than 70,000 Amazon-branded delivery trucks.
With Amazon owning this much infrastructure, Amazon does not only hold its first-party products purchased from brands within the said infrastructures. In addition, they have opened up their fulfillment centers so third-party merchants can also store and take advantage of Amazon’s vast fulfillment center network, creating yet another revenue stream for the multi-billion dollar company.
Furthermore, Amazon is looking to rival logistics companies in the freight services market with the recent launch of Amazon freight. Amazon freight allows third-party merchants to take advantage of their 30,000+ network of trailers to move freight from place to place.
With Amazon now letting third-party merchants utilize their vast infrastructure networks, from storing goods to delivering freight, many have said that this plan is giving off hints of what they did with AWS.
AWS was mainly created to be used internally by Amazon; however, as Amazon started selling its web services to other companies, AWS has become Amazon’s primary source of revenue and the leader in the competitive cloud market.
As parallels can be drawn between the way, AWS grew into one of Amazon’s most significant assets and the current surge in the Amazon logistics department, who is to say that Amazon’s logistics department won’t become as big as AWS?
With Amazon continuing to innovate, with the e-commerce powerhouse exploring new delivery possibilities with prime air, I believe Amazon will become the largest logistics company in the world and let history repeat itself.