Amazon Logistics was launched in 2015 with two objectives in mind:
If you thought that Prime was an astounding idea, then you haven’t experienced the excitement of virtual shopping and having the order arrived at your customers within 2 hours yet, and that too on Sundays.
The infrastructure of Amazon Logistics can either sabotage or help third-party sellers. It can considerably improve their capability to serve lots of customers and provide faster delivery. But if not done executed correctly, it can hurt their feedback or ratings to a great extent.
The result differs from one seller to the other, and it all comes down to how every seller uses the Amazon Logistics program wisely and how proactive he or she is in the approach.
As a seller, if you want to ensure that you are getting the most out of Amazon Logistics, without damaging your reputation or sales in the process, then, let’s look at it from all perspectives.
So, let’s get started.
Amazon Logistics is a well-known shipping & delivery service, which complements existing providers such as USPS, FedEx, and UPS.
In simple words, Amazon Logistics is more of a “last mile” shipping & delivery service, which gets packages delivered to their customers. So, it does the same work that national postal services like Royal Mail, USPS, and commercial carriers such as UPS & FedEx do.
However, Amazon Logistics isn’t a big corporation like FedEx. It is a technology-driven marketplace or network, like Uber, where Amazon is the buyer of delivery services, and independent delivery services and individuals are the suppliers.
The “capacity” of delivery is given by:
Note: Both the above delivery types (individual drivers & independent delivery services) are NOT Amazon’s employees. They stay under Amazon’s contract and operate under their standards but more flexibly.
The program offers two types of delivery options:
The “individual drivers” and 3rd-party logistics partners are spread throughout the country for making things happen–even including bicyclists, motorcyclists, and walkers in certain regions. Amazon has some stipulations for third-party providers (in terms of vehicle sizing, licensing, insurance, and safety training). However, it is crucial to remember that they aren’t Amazon employees.
Instead, they are independent logistics providers, who are under Amazon’s contract to pick up packages from Amazon warehouses and deliver them to the respective addresses. They use Amazon’s app for work guidance and register their deliveries. And the best part is that they enjoy flexible timings by picking up shipments at their will.
Recommended Guide: 10 ways to reduce your Amazon pick and pack fees.
With Amazon Flex, workers are paid for the number of hours they work – and it is a temporary “gig economy,” where they are free to opt for flexible “blocks,” meaning that they can work whenever they want to.
All they have to do is follow the process of Amazon and adhere to their performance standards. This is indeed an incredible opportunity for generating an extra income. No wonder it is highly appreciated and has a great response even today.
Well, the answer is pretty straightforward. When it comes to eCommerce, “shipping” is certainly the most unreliable and disorganized part. Unless the shipments leave the warehouses, the seller can control everything.
Then, the seller might encounter these situations:
And the list goes on.
So, there is a lot that can go wrong. No wonder a majority of customer complaints are towards shipping. Say, for instance, late deliveries, damage during shipping, inconvenient delivery time, etc.
But when Amazon has its network for delivery, it can completely control and monitor through technology. In addition, they can address various concerns of customers.
Also, it cuts costs and increases their delivery capacity. Amazon spent a whopping $21.7 billion in 2017 just on shipping.
Many delivery companies are seen as reliable, steady, and gradual to change. You can expect these services to:
Amazon Logistics inquires about these conventions to make sure that they don’t break them. A few of these services might be unprofessional or sloppy, compared to other established deliveries.
However, the same practices, most of the time, have greater customer satisfaction, which includes:
Amazon Logistics targets to give shoppers an alternative same-day shipping & delivery option. But these benefits are there only for Prime members. Even non-prime members can get these perks but after paying an additional charge.
They make deliveries all 7 days per week, the entire day from early mornings to late evenings, making it perfect for shipments, which need a signature. They treat every delivery driver like a third-party service provider, who is contracted via Amazon.
Amazon Logistics depends on different third-party contractors for running this service. However, with fewer professional requirements. Therefore, there isn’t any cost associated with becoming an official Delivery Provider of Amazon. Instead, the company or the individual should meet these criteria:
Amazon has placed this program more like an investment opportunity, targeting entrepreneurs especially to become their Delivery Service Partners (also called DSP).
So, the basic criteria to qualify for Amazon’s DSP program include:
For a startup cost of $10,000, Amazon projects that DSPs with 40 vans should have annual revenue figures between $1M and $4.5M and profits between $75K and $300K.
According to Amazon, for a startup with a $10,000 cost, the project that the DSPs with at least 40 vans will earn an annual revenue from $1M to $4.5M, with profits from $75K to $300K.
Note that the perks of Amazon Logistics are primarily intended for their shoppers. When it comes to customer experience, they put nothing as “excellent.”
So, this means that a third-party seller will not be at the top of the list. But that doesn’t mean you cannot make things work.
Think of Seller Feedback ratings, for instance. The main factors of it are:
Now, if you can get those packages fast than what has been listed, possibilities are that you will have customers who are more likely to leave favorable reviews for you.
However, on the flip side, you will not receive a precise delivery time while using Amazon Logistics. Therefore, you need to stick with the estimated timeframes as of now (probably, it will change in the future?).
Amazon hits their goals within 1-2 hours usually of what they estimate. So, you will have wonderful ideas of what exactly to tell your customers.
Amazon Logistics’ shipments appear as AMZL_US in tracking. Deliveries with this title are sent to special sorting centers where Delivery Service Partners can pick up these packages from any close by the facility and deliver them to customers on time.
They make the drivers install Amazon’s mobile app, which helps them to plan, get route directions, and handle the customer service. The program relies completely on third-party providers. Therefore, the service level differs from one DSP to the other.
On the other hand, providers such as UPS, USPS, and FedEx, have standard service, which customers are well acquainted with and know what to expect. However, the delivery experience of Amazon Logistics can be a hit or a miss. This makes it a problem for sellers at times.
Undeniably, Seller Feedback rating is a huge and critical factor of any third-party seller’s achievement. From contributing to winning the Buy Box to shaping a buyer’s opinion towards a seller, shipping plays a huge role.
Therefore, damaged & mishandled packages can easily lead to bad seller feedback.
Happily, sellers who are using FBA—or Seller-Fulfilled Prime—Amazon handles item replacement and customer support if an order is damaged or lost. Moreover, Amazon’s A-Z Guarantee Claim shields buyers who buy from 3rd-party merchants.
Sadly, an avid shopper is more likely to write negative feedback based on anger and frustration with his or her delivery. And a seller cannot choose which logistic provider he or she to use to ship the packages. So what should sellers do?
Well, sellers have to be more active.
As a seller, you should message each shopper once at least. You can reduce bad reviews if you follow up with your customers timely. And the best way to achieve this is with the help of a good Buyer-Seller Messaging system that automates all your tasks.
Just as a coin has two sides, this program also has its own set of benefits and drawbacks.
Also, the combo of internal teams & external partners enables for better global growth and initiatives like these:
Know that your reputation and sales are always at stake. So, the best action plan needs to be as practical as possible right from making a sale to delivery.
This means that you should communicate with your customers frequently. If you start implementing these ideas, you can prevent negative reviews and disappointing feedback from your customers and still be able to benefit from the Amazon Logistics program.
So, it looks like Amazon is persistent to create a denser and larger shipping network, competing with many well-known national carriers in the market.
Analysts say that this can even take decades to beat the competition. And if logistical leaders fail to keep up with the innovative platform, which Amazon is creating, they could see an unavoidable takeover in terms of fulfillment front.
Since Amazon is providing drone deliveries already, you could imagine what the future of the delivery system will be like. Their operational tactics could even magnify into freight forwarding unless they are holding your products from beginning to end.
Managing a bigger volume of orders ultimately paves the way for Amazon to have better control over every step of the supply chain, allowing them to meet their demands for growth.
Amazon Logistics grows every month and we firmly believe that this program now delivers about 2 percent of all the packages. You can utilize this to succeed in your business.
Amazon Prime Day 2021 surpasses
8 Comments on “What is Amazon Logistics and How Does it Work?”
claritaMay 7, 2020
Hello friends, good piece of writing and pleasant arguments
Arishekar NJune 3, 2022
GiantJuly 2, 2021
Arishekar NJune 3, 2022
Glad you liked the article.
SweesyJuly 4, 2021
Great blog post. Thanks Again.
Arishekar NJune 3, 2022
Judy BrandianJanuary 7, 2022
I couldn’t resist commenting. Very well written!
Arishekar NJune 3, 2022
Glad you liked it.