How Amazon Delivers On One-Day Shipping

Before Prime launched in 2005 one-day
shipping was an exorbitant luxury. Now it’s the standard shipping speed
for Amazon’s 100 million Prime members. Earlier this year Amazon doubled
the speed of Prime shipping from two days to one. And the faster speed is now available
on more than 10 million products. Prime one-day is basically going to A)
keep up with the brick and mortar guys and B) enhance Prime. Amazon has changed
the game completely. So what they excel at is getting an
object from a creator to a consumer as flawlessly as they can and
as quickly as they can. So Amazon is changing people’s
expectations and they’re perpetually improving those expectations. But behind every Amazon box there are lots
of people hustling and a lot of money spent to get it to
you in just one day. Here’s what happens when you buy
a Prime eligible item on Amazon spends tens of billions
on shipping every year. In just the last quarter of
2018, Amazon’s shipping costs jumped 23%, reaching a record $9 billion. So why is it worth it? Well customers come to expect consistent
fast delivery of anything on earth from Amazon. And our job is to
continue to make that happen. And Amazon set aside $800 million just
in the second quarter of 2019 to start making one-day
shipping the norm. Most of that investment is
going towards the infrastructure and transportation costs associated with speeding
up delivery to the millions of Prime customers who are about to
begin to experience one-day as the new normal. The difference with e-commerce is
the costs never end. The pick, pack and ship happens every
time a unit is sent out. To better control this process and its
large cost, Amazon is cutting down its reliance on UPS and the U.S. Postal Service and is investing heavily
in its own logistics network. It now handles the shipping
for 26% of online orders. Amazon now has at least 50
airplanes, 300 semi-trucks, 20,000 delivery vans and it operates ocean
freight services between the U.S. and China. Amazon is looking to do it all. That shouldn’t be much of a surprise. The only thing that matters to Amazon
is making sure the customer is happy and is paying for Prime
every year or every month. What that means is sometimes you can rely
on partners but you want to make sure that you have it in your
pocket if that’s not the case. Other big retailers are also spending a
lot to keep up with the fast shipping expectations Amazon
has created. Walmart is rolling out free next-day shipping
with orders of 35 dollars or more starting today. And target offers free two-day shipping
on orders over 35 dollars. And during Amazon’s big Prime Day sales
event July 15th and 16th, eBay plans to hold a crash sale
offering 80% off big ticket items. Amazon’s 25 years old. The reality is that’s a really short time
to be around to have become the number one player. So can anyone compete? Sure people can compete. Can they sustainably compete
is the harder question. I don’t think we’ve seen it yet. The journey a package takes to your
door starts before you even place the order. Most items on Amazon are sold
directly to you by a third party. In Jeff Bezos’ letter to shareholders
in April 2019, he said third-party sales have grown from 3% of total
merchandise sales in 1999 to 58% in 2018. Amazon charges those sellers a
fee to list items on starting around 15% of
the item’s selling price. Amazon also sells things directly. In some cases Amazon buys inventory from
a third party and then sells it to consumers. Other items are Amazon’s own brands
such as Amazon Basics, Amazon Essentials, fashion lines like Lark & Ro
and Alexa devices like the Echo. All items sold directly by Amazon
are already sitting in an Amazon warehouse waiting to be
ordered and shipped. Most third-party items fulfilled by Amazon
are also already waiting at an Amazon warehouse, while others are sent directly
from the seller or to an Amazon warehouse once you hit
that place order button. Amazon does not disclose the
details of its inventory strategy. Figuring out where a product sits before
you buy it is a phenomenal mystery. It’s something that every
reseller would love to know. And figuring out the code that is
Amazon has been part of that hard process. After an item is ordered and ready
at one of Amazon’s 175 fulfillment centers around the globe, it’s picked, packaged
and shipped by some of its 250,000 warehouse workers often with help
from one of its 100,000 robots. It’s essentially an amusement
park for a box. There’s conveyor belts that go
around, there are slides. It looks like a lot of fun. But the question is: how much is
automated versus how much his manual labor? And that suite, blending that, figuring
out how to have the least human touch points while ensuring the
best quality control is that perpetual conversation. We visited a fulfillment center outside
Seattle where 2,000 workers prepare packages on a couple million
square feet of floor space. Workers here showed us the process of
getting an item from the shelves to a box. We scan the item and make sure that
that item is what matches what’s in our hand that’s on the screen and then
we stow it into a bin. And then there’s cameras here that take
pictures of where our hands go of where we place the item. I am a picker so I pick product that
will end up going down to the packing department and then they pack it out
and send it to our customers. I need to put it into a box. It actually tells me what
type of box it is. Tape. Put the item in there. Scan it through. Drop
it down the line. Amazon says it’s 100,000 robots inside
the fulfillment centers help make this whole process more efficient. In 2012 Amazon bought robotics company
Kiva for $775 million and started using robots in its fulfillment
centers a couple years later. Now there’s driving robots that move
inventory around, robotic arms that lift boxes and pallets and even a
new robot that can package items in custom-sized boxes. If it wasn’t for them then I’d have to
walk and I’d much rather be up here in my own little world picking
then walking up and down. So I love the robots. As technology continues to change
how fulfillment centers function, Amazon just announced it will spend $700 million
to retrain a third of its U.S. workforce by 2025 to move
them to more advanced jobs. After an order leaves the fulfillment center
it has to get across the country or world to another
warehouse in your region. Some boxes are sent via one of
the shipping giants, but Amazon is cutting costs by sending packages in at least
300 of its own semi-trucks and now dozens of its own planes. We’ve been building out an air network
for a number of years now. That coupled with our partners networks, we’re in
a place we have a lot of incremental capacity to be able to
advance packages for customers much faster than we were two
or three years ago. Amazon broke ground on a new 1.5 billion dollar air hub in
Northern Kentucky in May. It has capacity for 100 planes. One of the great things about customers
all over the world: they are divinely discontent. You give them the
best service you can. They love it. But they always want
a little bit more. We’re going to move Prime from two-day to
one-day and this hub is a big part of that. After an item arrives near your city
it waits in another warehouse like this one for a delivery person to pick it
up and take it that last mile to your door. We’ve been building for over 20
years to support this network that’s eventually just constantly getting faster and
we knew would begin to migrate to a one-day service. The big difference for us is all
about how we get product from our fulfillment center to
that last-mile location. Last-mile is the most expensive
part of the delivery process. Until an item arrives at a warehouse near
your home, it can be shipped in bulk. But then each package needs to
be hand delivered to a different address, which takes a lot of
people and a lot of time. Amazon pays to outsource much of
last-mile delivery to carriers like UPS and USPS, which charge a fee,
and those fees just went up. In January the post office increased
its last-mile shipping rate by nine to 12% depending on package size. The more Amazon can keep last-mile
delivery in-house, the more it can control these costs. To do that Amazon uses small
business partners, some delivering out of 20,000 Amazon vans. And in 2015 it launched Amazon Flex. I’ve been driving for Amazon Flex roughly since
2016 on and off, I’d say at least two solid years. Amazon Flex is available
in about 50 U.S. cities. Anyone over 21 with a
driver’s license, auto insurance and at least a mid-size sedan can sign up. After clearing a basic background check,
drivers in areas with open spots can start picking up
and delivering packages. Drivers use the Flex app to sign up
for a block, which ranges from three to six hours. Then they head to a warehouse where
they find out how many boxes they’ve been assigned to deliver
in that timeframe. Amazon advertises that drivers make $18
to $25 an hour and they’re responsible for their own vehicle costs
like gas, tolls and maintenance. Amazon wouldn’t disclose how many drivers
have signed up or what percentage of its last-mile deliveries are
made by Flex drivers compared to its shipping partners. But it did tell us their
last mile delivery programs are expanding. We’ve built out these small businesses,
the delivery service providers, and we have Flex which is
our on-demand crowdsourced delivery piece. So we need all of that to meet the
various types of delivery we do in each of our geographies and I think you’re
going to see expansion on all fronts there. Amazon has one unusual approach to
increase its number of small business partners helping with last-mile. Amazon says it will contribute as
much as 10,000 thousand dollars if full-time employees want to leave the
company and start their own package delivery services. Early response is great. It allows us to complement the capacity
that we have with our great carrier partners. It’s great for some of our employees who
don’t want to do the same thing that they’ve been doing in the warehouse
for five or 10 years. They want to learn some new skills
and over 16,000 employees have already taking us up on this. Amazon is also looking at several
high-tech solutions to streamline last mile delivery. In June, Amazon announced its new
autonomous delivery drone will be operating within months and it has a
one year FAA permit to test them. We’re building fully electric drones that can
fly up to 15 miles and deliver packages under five pounds to
customers in under 30 minutes. Amazon also has patents out for a
giant flying warehouse and drones that can react to flailing
hands and screaming voices. And it’s even testing a sidewalk
robot called Scout to bring packages right to your door. All these steps are an incredible
challenge to pull off. In recent years, Amazon has faced an
onslaught of negative press about working conditions at every
step of the process. We spoke to several
workers about their concerns. The working conditions at Amazon
are dangerous and that’s systemic. I’ve worked in five different buildings
in three different states from coast to coast and
it’s the same everywhere. It might not be outright exploitation but
it is almost like a disposable workforce. It’s been so pervasive that many of the
pilots, in fact most of the pilots at our airlines are
actively seeking employment elsewhere. Last year Amazon raised the minimum wage
to fifteen dollars for all its 350,000 U.S. employees, more than double the
federal minimum wage of $7.25. In his annual letter to shareholders,
owner Jeff Bezos challenged other top retail companies to match this. And Amazon offers generous benefits. I needed my medical insurance. That’s what’s essentially kept
me at Amazon. But some workers, most who asked
to remain anonymous, told us Amazon expects them to keep up
a fast, often unreasonable pace. They say that they care
about their employees and quality. But no, it’s really
just about numbers. You have to make not only a certain
rate but you can’t accrue more than 30 minutes of time-off-task per day
otherwise you get written up. Usually most buildings are at
least a million square feet. You could be walking three to five
minutes each way to go to bathroom. So if you went to the bathroom twice
you could easily use up that 30 minutes. So a lot of people
don’t go to the bathroom. CNBC was connected to Fuller through
the Retail, Wholesale and Department Store Union. Although he’s not a union member. We asked Amazon about the
working conditions in fulfillment centers. We have world class facilities, we
have restrooms all over this place. We have break rooms. We have TVs. Anybody who is watching, don’t
take my word for it. Please come take a tour
and see for yourself. I’ll put us up
against anybody any day. Do you feel like the pace that workers
are asked to work out is reasonable? Well our, the way we look at
productivity rates, just like anyone, we have expectations. In every job, my job
has expectations, your job has the expectations. The way we set the rates
and the processes are based on actual performance and the overwhelming majority
of employees are able to meet those expectations. Warehouse workers told us their productivity
is closely tracked based on how often they scan a package. Workers told us they can get written
up if they don’t meet certain metrics. Amazon also has patents for a
GPS-enabled wristband that could track workers’ movements and breaks. I think too often people look at
that technology and sort of debate, is this Big Brother tracking an employee
or something to that effect? And you know really almost all the
time you look at these wearables or other types of things like that,
they’re usually some form of safety device. Workers can lose their jobs if
they don’t work fast enough. At one warehouse in Baltimore, The
Verge reported that Amazon terminated 300 full-time associates in a one-year
period between 2017 and 2018 for inefficiency. Amazon said in a statement
that “the number of employee terminations have decreased over the last
two years at our Baltimore facility as well as
across North America.” Amazon workers are under attack. What do
we do? Stand up, fight back. There have been several protests in the
last few years around the world where Amazon workers have
demanded better working conditions. In orientation they
talked about safety. That was the number one thing. Safety. And you get
there and that’s forgotten. In the UK, ambulances were called to
Amazon warehouses 600 times from 2015 to 2018. In April, the National Council
for Occupational Safety and Health identified Amazon as one of a
“dirty dozen” companies, citing six deaths in seven months and
13 deaths since 2013. But Amazon says that last year alone
it spent $55 million in safety improvements at fulfillment centers and its
employees got a million hours of safety training. As Amazon increases the shipping speed,
can they also increase conditions to be more fair, equitable and
sustainable as far as safety goes? Well I’m incredibly proud of the safety
record of our sites and the focus of our leadership team on safety. Any incident is one too many and
anytime something happens, our teams come together and figure out what happened and get
to the root cause and try to eliminate anything from occurring
again in the future. Amazon Air is another area where growth
in the program has led to challenges. Amazon-branded planes are flown
by contract pilots from Atlas Air, ABX and Southern Air. These airlines negotiate contracts
with the pilots. And five of these pilots told
us working conditions have deteriorated since their airlines started
flying for Amazon. As a result of Amazon being such a
large company, they have the ability to put a very strong pressure on our
companies and have them drive down our pay and working conditions as pilots. Dan Wells heads up the
union that represents these pilots. They protested outside Amazon’s annual
shareholder meeting in May. They also spoke out in April against
poor working conditions and low pay near the new Amazon air hub. We have a hard time
maintaining enough qualified pilots. There’s a tremendous amount of turnover
at these carriers which in net reduces experience and creates a lot of
stress on things, a lot of frustration, which certainly distracts people
from their duties as pilots. In February, an Amazon Air plane
operated by Atlas Air crashed near Houston, killing all
three pilots aboard. The cause of the crash is
under investigation with initial National Transportation Safety Board findings showing
the pilots may have lost control of the plane. In interviews with Business Insider
weeks before, several Amazon Air pilots said they thought
an accident was inevitable. They cited low wages that made
it difficult to attract experienced pilots, training they considered shoddy,
fatigue and poor morale. Pilots that are working for
Amazon’s contractors are overwrought with schedules and scheduling changes
and constant training. All of those things have added to
greatly increasing the risk in the cargo system that we fly in. In a statement Amazon said, “All
of our airline delivery providers must comply with the Amazon Supplier Code
of Conduct and Federal Aviation Administration regulations. We take seriously any allegation that
a delivery provider is not meeting those requirements and expectations
and review accordingly.” Workers bringing packages that last mile to
your door also told us safety is a concern. One reason: Amazon doesn’t provide Flex
drivers with any branded clothing to identify them. I’m pulling up to this house and I get
to the front door and you know this guy just comes running out like,
“Hey what are you doing?” and he’s talking so fast and I
was thinking you know I’m in Connecticut. You know I’m a Puerto Rican guy in
a white guy’s yard and like, you know, what if he just comes out and
shoots me in the face without asking questions? You know that was my fear. After another delivery where he says
a customer let his German Shepherd charge at him, Jonathan paid 45 dollars out
of his own pocket for a custom sweater on Etsy. I think Amazon the least they could do
is give us something that would make it a little bit safer and make
us more visible when we’re out there delivering. I’ve gotten a lot of mean glares
from people because they’re like, “Who is this guy? He’s just in front of my driveway or he’s
parked in front of my house. He’s just wearing a yellow vest.” You don’t even have to
wear that vest. It’s just, I do it because at
least I look less suspicious. In a statement Amazon said, “They are
welcome to wear the safety vests that we have available for them in the
delivery stations while they’re on their route which can help
customers identify Flex participants.”. And some drivers told us the way
the Flex app works encourages distracted driving because it requires drivers to
manually tap refresh to secure their next assignment. If you want to get blocks then you
have to be tapping on that refresh button in the app
pretty much constantly. But how do you do
that while you’re delivering? So it encourages people to
do it while they’re driving. In a statement Amazon says, “Safety is our
top priority and we are proud of our safe driving record. We regularly communicate a variety of
safety topics including loading and driving practices with drivers. Amazon Flex participants can also sign up
for delivery blocks up to a week in advance through the
Amazon Flex app.” Amazon is working to ease the burden
on its delivery drivers and save money with high-tech solutions like those drones
and Scout sidewalk robots, and its fulfillment centers are
becoming more automated, too. Our focus on automation has really been
begin in automation in the places that can be most
beneficial to the workforce. Remove the most tedious task, remove
the heaviest lifting task, whether that be lifting large containers or
bringing the inventory to the associate so they don’t have to
walk through Earth’s most massive selection in order to find
the thing they’re looking for. But for now Amazon still relies on people
to bring us our packages in just one day. And with expectations for
rapid delivery only growing, Amazon will need to continue innovating
to make shipping even faster. We will see shipping
speeds increase every day. The announcement that Amazon is going
to one-day is ironic because in certain regions we have it
in an hour already. That’s not going to stop. And what’s absolutely critical is any
company that sticks their head in the sand even if it’s Amazon. We’ll see the competition
pass them by. That’s the one guarantee
we have in retail.

100 thoughts on “How Amazon Delivers On One-Day Shipping

  1. These idiot FLex drivers don't understand business hours. Packages delayed by days on end. They need to go back to UPS/FedEx only.

  2. I wouldn't be to gun ho on the drones and side walk robots. All it takes is for someone to see that flying over some remote part of a state, shoot it down and take whatever it is

  3. Time and time again Amazon has exceeded my expectations with delivery and prices.
    I've signed up for very few "memberships" in my life but Amazon prime will remain one that I will joyously renew.
    Loyal Amazon customer.

  4. Because of amazon free shipping. Etsy made us to do $35 free shipping as well… Handmade products takes time and we can’t sell cheap and offer free shipping as 1 seller. How can I make the profit?

  5. one day shipping?! sounds great! but I read a brilliant article on why it's not working on the long run! highly recommended!

  6. They attach an explosive neck collar to the delivery man, and if they don’t meet the quota, the collar will go off

  7. "People will always want more." This is the problem of society, that it mistakes material acquisition as the meaning of happiness but material acquisition brings with it worry and having to maintain those acquisitions. Its why Thoreau advised that the wealthy are all the more poor because now they have to sustain that wealth for their sense of being happy.

  8. Eh. I haven’t bought in to this prime shipping crap. I am okay waiting a few days or a week for my product as long as the cost is low. And I never buy last minute items. It’s called… planning AHEAD. also, that man that’s talking about the perks they have at their facilities for employees, is b.s. he’s just another face spouting of yet another rehearsed response. Most of the time, as you move up in position? You seem to forget how things are done at the very bottom and you lose sigh of these things. It’s a shame.

  9. I truly believe that Amazon should work to make conditions better for their employees. $15 an hour should be what they walk home with, a minimum. They should offer health, dental, vision insurance with no premium per month and no co-pays for them and their immediate families. They also should offer competitive retire plans, a paid 15 minute break every 4 hours, and a paid hour lunch break after 5 hours of work! As well as quarterly reviews for raises. They truly can do so so so so so much more than they are doing. Amazon being proud that they are at $15 an hour is not enough. The federal minimum wage is a joke.

  10. the money moves off shore even faster than they deliver your box, amazing. Your privacy also is lost in split seconds. Your entire life is now data-based and data-mined in mere nanoseconds. If one day they decide people shorter than 5'4'' need to 'go away" they will have that list in seconds. Imagine what the next Hitler can do. But hey as long as the book I will never read gets to my door in 2 hours its all good.

  11. Over 100k in debt being prevalent plus shortages mean you WONT get experienced pilots (I'm a former airline first-officer). Cutting even small corners can be catastrophic. The professional pilots out there are the best advocates for safety, but going against such large 1,000 gorillas makes this a challenge.

  12. I was written up on my first day ……because I wasnt keeping up with the paste and requirements of working at one of their centers .
    I witnessed amazon first hand fire most of the people who worked there 2 – 3 years because they were going to be able to sell their stocks in amazon soon .

    Also……a amazon manager actually told me that his boss told him to find any reason to fire people who have been there for 2-3 years so someone could get fired for the simplest reasons even if the worker has a medical reason or disability for moving a little slower on certain days .
    Some of those physical strains are actually caused by working to amazons harsh standards but if you dare complain about it to their medical team they try their best to make you feel like your the reason you feel hurt or bad .
    I actually had someone from the medical team once tell me after I got my wrist twisted slightly between two boxes that 1. I wasn’t doing as they trained to grab boxes 2. I wasn’t taking care of my self properly at home and 3. Put icy hot on it, rest it for about 20 mins, and get back to work . Only if I complain again about it will they possible send me home for my so called own safety but would not pay me for a medical leave .

    Amazon only cares about one thing…..and that’s profit .
    Yes they pay well….but that only started within that last year or so and I’m sure they are working their employees like slaves to make up for the fact they got a raise .

  13. Flex drivers are really idiotic. $18/hr using your own SUV/Truck/Van? After tax and expenses, you'd be lucky to pull in $10/hr. Amazon, just like Uber, relies on these idiotic/gullible people in our society to thrive. The rich takes advantage of the poor so the rich stays rich. That's how the world works.

    I do my part to take advantage of Amazon as much as I can. Every time they offer Prime for a free month, I'd take up the offer without hesitation and then cancel. Gotta do what ya gotta do.

  14. Once Amazon goes fully automated, they won't have to worry about over working employees or employee safety! lol They won't even have to pay the drones!

  15. Then there’s lazada and shopee from ph. 3-5 working days before u receive the item sometimes the item is defective haha

  16. i own drone delivery last mile; flying drone; and land drone;
    CNBC as intermediary; because last mile is cost basis; money save;
    i want 15% of last mile delivery drone is replacing; not of drone;
    this is only to amazon; no one else;

  17. I actually work for a factory that makes shipping trucks and we actually just got contracted to make 20 Amazon trucks per day 5 days a week for the next 3 years at least a little under 16 thousand trucks just from the day shift alone !
    They are going to grow fast

  18. They basically bank on people mindlessly buying their prime service with only buying a small amount of things per year.

  19. haha I had my parcel thrown in the garden and a piece of paper in the door with an entry parcel in the garden

  20. Wow got a notification on my watch that my Amazon order has shipped while watching this lol what are the chances of that 🤣

  21. Amazon is the greatest thing to come along since sliced bread. I use it at least twice a month from small to really large orders. I have 7 friends & family members that work for them here in CA, in the warehouse & drivers, and they love it.

  22. I worked for them in 2015-16. They still have jobs there where you have to walk all shift hauling boxes or totes none stop that you will have blisters on your feet the first night you do this.

  23. Towards the end the "ARROGANCE" is real. Amazon is big now but like other giants they will fall hard very soon!!! They tend to forget they need their employees to make their billions. Eventually workers are going to catch on and realize this.

  24. You know the leftists want to expand the unwilling and unable to the "not good enough" or "not fast enough". I can't wait until all my shortcomings become my strength. Lol. All those years I worked in the hub facilities at UPS. I was born in the wrong decade.

  25. More like One-Week shipping. The only thing Amazon delivers on time is more Baby Blood to their #VampireCEO

  26. Very misleading about the way the system works Amazon does not buy anything for FBA. They charge sellers to ship to the Amazon warehouse and take a % of the sale

  27. The safety isn't forgotten. The knowledge of understanding that your safety is solely YOUR RESPONSIBILITY, NOT AMAZON OR ANY OTHER BUSINESS!. Its called doing your job!. Everybody wants businesses to give them lightweight labor work with t-bone steak prices!. $15hr and full medical insurance isn't good enough for people who grow up without anything. These individuals feel they deserve the WORLD because there finally working for the first time in their lives. Personally Amazon shouldn't hire anyone over 50 years old due to lack of physical motivation !.

  28. Amazon, please, don't make 1-day delivery a norm. Most people don't actually need it, and you're killing your own employees for it.

  29. That delivery guy in the thumbnail obviously doesn’t carry as many packages marked “team lift” as the USPS , the people who are supposed to bring your mail now deliver Amazon freight . My little mail truck needs to be filled two times a day two runs a day to get the Amazon and Mail delivered. Amazon NEEDS to delivery their own packages everywhere even in rural . Post office gets around a dollar to deliver each Amazon parcel but Fuel ,breakdown costs, and overtime put each package at a around $3 to deliver. Post office is getting what they asked for. Screwed

  30. Hopefully they replace all workers with robots soon so those workers don't have to suffer at all and everyone can go complain about something else.


  32. Amazon in 20 years from now: Fully automated to the point it won't need its 350k work force full of whiners that simply just want to get paid and not work for it. Those people can simply quit anytime if they don't like it but no, they'd rather whine and cry about the conditions so amazon raises their hourly pay and even then it's not enough. I couldn't imagine having a company that big and dealing with people like that. 600 ambulance calls to amazon centers in 3 years? Insurance scams anyone? come on.

  33. Why Target or walmart cant compete with amazon? Because they dont have the products that Amazon has its simple as that.

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