18 DC VELOCITY JANUARY 2018 www.dcvelocity.com
newsworthy
Amazon tests program to provide two-day deliveries on broad scale
Amazon.com Inc. is testing a program to offer two-day
nationwide deliveries for all shippers, including those who
aren’t Amazon customers, a project that could spawn the
largest U.S. transportation network buildout in decades and
cap Amazon’s multiyear effort to create an in-house operation to meet surging demand for its products and services.
The program is being piloted in Los Angeles and in
nearby Orange County, Calif., both markets with enormous populations and, by extension, strong shipment
density, according to a source who has held high-level jobs
at Amazon and works with businesses that cumulatively
spend hundreds of millions of dollars with the Seattle-based e-tailer. Information on the proposed buildout was
provided by a client who is involved in the pilot program,
according to the source, who asked for anonymity.
Amazon “wants to pick up all of [a customer’s] orders
regardless of what they are and where they’re going,” the
source said.
There is no known timeframe for completing the pilot,
nor is it known when an expansion might occur should
Amazon founder and CEO Jeff Bezos give the go-ahead, the
source said. Amazon declined comment.
The program has several objectives, according to the
source. They include ensuring that Amazon’s shipping and
fulfillment operations consistently meet customer delivery
commitments; making maximum use of Amazon’s considerable—and rapidly growing—capacity; and, perhaps most
significantly, convincing businesses that currently don’t do
so to sell on Amazon’s website and use its fulfillment and
delivery services, known as Fulfillment by Amazon (FBA).
Through the first nine months of 2017, Amazon’s “net
service sales,” a figure that mainly consists of FBA revenue,
hit more than $40 billion, up from $28 billion in the same
period in 2016. Amazon reported more than $117 billion
in net sales during that period, $77 billion of which came
from sales of merchandise on the company’s website as well
as related products.
LEVERAGING LOGISTICS ASSETS
Besides offering shipping services to all customers, Amazon
would accept shipments of all sizes, going beyond the parcel
deliveries that have dominated e-commerce for nearly 25
years. The company plans to execute all deliveries within
the two-day delivery commitment under its very popular
Amazon Prime program, where customers pay a $99 annual
fee for unlimited two-day deliveries of most products sold
on Amazon’s website.
The Prime service, which as of October had an estimated
90 million members, has become core to Amazon’s value
proposition. One key reason is that, according to industry
estimates, Prime customers order nearly twice as much on
Amazon per year as non-subscribers do.
The pilot is leveraging Amazon’s domestic transport and
logistics assets. On the facilities side, that includes fulfillment centers, inbound and outbound sortation centers,
delivery stations, a 2 million-square-foot aircargo hub
under construction in Cincinnati that’s expected to open in
late 2018, and local hubs to support its Prime Now service,
which offers free two-hour deliveries to Prime members.
Amazon has a combined total of 262 such facilities in the
U.S., according to figures published in November by the
consulting firm MWPVL International.
Amazon owns thousands of 53-foot trailers designed for
medium- to long-haul transportation, owns or leases hun-
Commonwealth Supply Chain Advisors has hired
Drew Eubank as a senior consultant in the company’s
Atlanta office. … Brian Neuwirth,
president of order picking solutions provider
Unex Manufacturing Inc., has been appointed to the board of directors for the Material
Handling Education Foundation Inc. (MHEFI).
Neuwirth will serve as vice pres-
ident of the board. … Rob Reich, senior vice
president of equipment, maintenance, and
driver development at Schneider, has been
elected chairman of the North American
Council for Freight Efficiency (NACFE), a
nonprofit organization dedicated to doubling the effi-
ciency of North American goods movement. … DMW&H,
a full-service material handling solutions provider, has
welcomed Jimmy A. Menoscal to its Post and Parcel
group as project executive. … S&H Systems has promoted
Bill Hawthorne to executive director of marketing and
business development. … UniCarriers Americas Corp.
President James J. Radous III was named to Crain’s Chicago
Business’s 50@ 50+ list of individuals 50 or older who have
made outstanding contributions to their companies and
communities. … Icat Logistics Inc., an agency-based global
freight forwarder, has appointed Michael Alsop executive
director of corporate operations and compliance.
NEUWIRTH
newsmakers
REICH
