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wendover about 13 million times per day
someone clicks the order button on
amazon.com
some days later all or at least almost
all of those 13 million orders arrive
at their destination but what happens
in between how does amazon get a package
to you well it depends a lot
in fact amazon's fulfillment system
their shipping system
is more complicated and convoluted than
that of almost
any logistics company it's far more
complicated than that of ups
or fedex or dhl or any other major
delivery company
in a counter-intuitive way this
complicated and convoluted fulfillment
system
is a crucial component of the secret
sauce that's
driving amazon's success they're
striving to make the consumer experience
simple
through behind the scenes complexity so
back to the question
how does an amazon package get to you
and the answer
it depends it depends first on who's
fulfilling the package
amazon or the seller about one-fourth of
sales in the us are fulfilled directly
by the seller
as most products on amazon are listed
there by a third party
which can send packages directly through
ups fedex the postal service or another
consumer delivery company if they choose
amazon has nothing to do with the
fulfillment of those orders
and the process looks largely the same
as with any other e-commerce company
what's different is how the other three
quarters of amazon packages in the us
get to you the ones that are fulfilled
directly by amazon
the path that these take depends first
on how big the package
is you see amazon's fulfillment centers
are more or less split into three
categories
small sortable large sortable and large
non-sortable
that first category small sortable
represents the bread and butter of
amazon's business
these are items that are less than 12 by
16 by 6 inches or 30 by 40 by 15
centimeters in size
and about 25 pounds or 11 kilograms in
weight
the next category large sortable is
basically anything larger than this
up to a weight of about 60 pounds or 27
kilograms
now the reasons for the split between
large and small is because the
fulfillment
operations of smaller items is much
easier to automate
they can fit on conveyor belts and
automated robots and other tools that
lower the company's reliance on humans
for example amazon uses a robot called
the kiva
which fundamentally changed the way the
job of the company's pickers
the people who find and grab an item out
of storage worked
previously pickers would walk some 10 to
12 miles or 16 to 19 kilometers a day
through cavernous rows of shelves
now at least in their most advanced
fulfillment centers
a robot picks up an entire mobile shelf
on which a required product is located
and transports it to the picker who
picks it essentially
rather than the picker going to the
shelf the shelf goes
to the picker with these robots one
person can pick
three to four hundred items an hour
rather than the 100 or so that was
possible on foot
of course fewer humans in the mix is
good for amazon given the amount of
criticism it receives for its treatment
of workers
and because humans even low-paid ones
are expensive
the fulfillment process for larger items
though is just tougher to automate
cheaply
so the company chooses to segment the
two processes out and runs a far more
manual and distinct fulfillment system
for larger items however in most but
not all cases the fulfillment centers
for large and small items are under the
same roof
even if they're operated completely
independently of course the ideal
scenario for amazon would be to have
every single item they sell in every
single warehouse
but that's not realistic therefore
they use predictive modeling to try to
put items closest to those who are
likely to buy them
the u.s is far from homogeneous so
demand for different products varies
from place to place
for example in miami people probably
aren't looking to buy many ice scrapers
for their cars
meanwhile in fargo north dakota demand
for this item is almost certainly
quite high it's therefore no wonder why
that
if you look at the data the colder the
city the faster you can get
an ice scraper on amazon that is
amazon's predictive stocking
at work while most examples of this
system are far more nuanced and far
less intuitive the concept is simple
their algorithms put products closest to
the consumers most likely to buy them
something only possible at this scale
thanks to modern big data analytics
of course there's then that third
category of products
large non-sortable the distinction here
is because amazon likes to aggregate
products together into as few packages
as possible
unsurprisingly fewer packages equals
lower costs
so both these sortable categories
include anything that could possibly be
packaged together in a single box
the largest items say a 70-pound beanbag
for example
are shipped from the large non-sortable
fulfillment centers
these facilities are even less automated
than the large sortable ones
and even include workers who create
custom boxes for odd-sized items
in colorado for example this is a
completely separate facility located in
aurora
from the sortable fulfillment center in
thornton now
some large items will go directly into
the system of a third-party provider
typically xpo logistics which would
deliver these bulky items to their final
destination
while others will continue on in
amazon's system
the portion of large non-sortable items
not sent to a third party logistics
provider
plus all the large and small sortable
packages would next be sent to a
regional sortation center
in colorado those two fulfillment
centers send their packages to a single
sortation center
located just minutes away from the
aurora fulfillment center
this is a massive facility almost half a
million square feet in size
with robots running around dropping
packages into different shoots
which each represent a different
grouping of zip codes
now not all the sortation centers are
quite so automated
but each outputs the same thing pallets
of packages going to roughly
the same place what happens next though
once again depends a package heading to
miami for example
would end up on a pallet with other
packages for miami
which itself would end up on a truck
carrying pallets for tampa
north carolina houston baltimore new
york city connecticut
and a few other cities and states to the
east this truck would then drive
the 15 minutes to a waiting 767 cargo
plane at denver international airport
branded in prime air livery now amazon
air
started in 2015 with its lease of about
20 aircraft from air transport
international
and has since grown to almost 70
aircraft all leased from other airlines
however the company recently announced
the purchase of their first
11 aircraft also 767 bought from delta
and westjet
meaning they'll soon both own and
operate their own aircraft
those eastbound pallets would all be
loaded around 4am
before the aircraft's scheduled
departure time of 4 54 am
now anyone familiar with ups or fedex's
operations
will know why this departure time is
strange if ubs was transporting this
package to miami
at least at its fastest speed it would
have departed on an aircraft the
previous night at 9 40 pm
been flown to louisville sorted through
the company's hub then flown to miami
arriving at 5 50 am
fedex would have done roughly the same
just through memphis instead
that's because fedex ups and most other
major delivery companies are oriented
towards overnight delivery
they make a big chunk of their money
charging big rates to take a package
from one part of the us
one day and deliver it to another the
next day amazon meanwhile built
their prime brand off the promise of two
day delivery
ordering a package on a monday and
getting it on a wednesday for example
while they've sent straight from the
rigidness of that system
the fastest shipping they'll offer for
an item not stocked at a local
fulfillment center
is two days meaning they don't have to
worry about being able to get a package
from denver to miami overnight
that's why ups and fedex's planes take
off in the evening
while amazons leave in the morning so
that means it's about
9 00 am by the time that amazon airplane
from denver gets to cincinnati airport
each day
through the morning hours a dozen or so
aircraft land in cincinnati
and this timing gives the company a
major advantage
cincinnati airport is also home to dhl's
main americas hub
but dhl like fedex and ups conducts its
operations primarily overnight
starting at around midnight when dozens
of their aircraft from around the world
land and unload over the next few hours
packages and pallets are sorted and
unloaded onto
other aircraft which all tend to take
off by 8 am
that means dhl only really uses their
facility during the overnight hours
so amazon leases it for daytime use
while amazon is building their own
larger facility at cincinnati airport
this partnership gave them a huge head
start
so each day between 8 a.m and 4 p.m
amazon's there
turning their planes around and sorting
pallets from where they come from
like denver to where they need to go
like miami
that miami flight takes off each weekday
at 2 15 pm
and then it lands in florida just before
5 pm eastern time
now not every amazon air itinerary
looks like this in fact while ubs and
fedex route almost
all of their flights through their
louisville and memphis super hubs or
through some of their secondary hubs
across the country
only 20 of amazon airs flights go
through their
main cincinnati hub that's because with
their orientation towards
two day delivery versus one they just
have more
time the more time means that in order
to service the entirety of florida
amazon only needs to fly to three
destinations
miami tampa and lakeland that's because
amazon's flights to these airports
typically land by 5 pm
meaning there's a whole 12 hours before
packages have to be at the local
delivery center for the final
destination
the entirety of florida is within an
eight-hour drive of lakeland
meaning amazon can deliver to all of
florida by only serving effectively one
but in practice three
airports meanwhile fedex for example
flies from memphis
to fort lauderdale fort myers
jacksonville tallahassee tampa and palm
beach
then from fort lauderdale it operates
feeder flights on smaller aircraft to
key west and marathon
so in summary in order to serve all of
florida
this is what fedex has to do and this is
what amazon has to do
the required number of destinations for
full coverage is greatly reduced by
orienting for two day delivery
and this also means that amazon doesn't
have to route every flight
via one main hub because they operate to
far fewer destinations it's much easier
for amazon to fill a plane from
california for example
exclusively with packages destined for
florida since while a given ups or fedex
flight carries packages
from or to just one city a given amazon
air flight
likely carries packages from or to a
whole state or region
therefore amazon air has flights from
all these airports to lakeland
meaning that while a package from denver
would have to route via cincinnati
one from los angeles or dallas or
chicago could
fly direct with a full hub and spoke
strategy
like that of ups or fedex a package
would have to be loaded and unloaded
from aircraft twice
and sometimes more while amazon airs
non-stop flights only require loading
and unloading once which reduces cost
and can fly packages direct which also
reduces cost
this is how amazon can transport
packages by air more efficiently
than ubs or fedex the airplane however
is just one of five routes that an
amazon package could take onwards from
the denver sortation center
for those that are to be delivered
locally in the denver area
they'll be driven to one of four
delivery stations for denver
there they'll be loaded into smaller
delivery vans operated by independent
companies or individuals contracted by
amazon
which will take the packages to their
final destinations
this is the one and only case in which
an amazon package is handled by amazon
logistics from start to finish
and it's generally how their packages
are delivered within major urban and
suburban areas
only a slim majority of their overall
package volume is delivered this way
though
as when you leave major urban areas
things get a bit
more complicated now a package heading
outside the denver area with a later
delivery date
or with a destination within the greater
rockies region
would end up on an amazon branded but
independently operated semi truck
for example packages to the aspen area
about a three to four hour drive into
the mountains
leave at around 1am each night early in
the morning however
at around 5 a.m they arrive at the local
post office
and from there they're fully transferred
into the united states postal service
system
for final delivery you see in less
populous areas
like the mountains of colorado it just
doesn't make sense for amazon to operate
their
own last mile delivery they need a
certain amount of scale for that to be
cheaper than the alternative
and at least right now that scale is
only possible in major metro areas
therefore they need alternatives for
smaller cities
towns and rural areas and that
alternative is more often than not
the usps that's because the postal
service charges very low rates for last
mile delivery
assuming amazon transports the packages
to the local post offices themselves
while exact numbers aren't publicly
known estimates indicate the usps
charges amazon about two dollars per
package for last mile delivery
about half of what other delivery
companies would for the same
service after all the usps services
every address in america
so wherever amazon needs to deliver the
usps
is going there anyways that's why for
smaller places that still have
a decent volume of packages like
mid-sized towns and cities
usps delivery is often the cheapest
option for amazon
but then there's that next step down
the most rural places in america
everything that can't be cheaply
delivered by amazon or the usps
typically because they're destined for
low density areas where you couldn't
even fill a truck to send to the local
post office
or because of capacity or speed reasons
is sent through ups
right now it's believed that about 20 of
amazon's packages
end up delivered by ups in colorado a
package destined for the most rural
areas
like the western edge of san miguel
county for example would take
this route it would cost amazon far more
and they'd likely end up losing money on
the cheapest items
but it's what's required for them to be
able to service every address
in the us quickly no matter which of
these routes a package takes
the end result is at least hopefully the
same
ups the usps or amazon itself drops off
a package at its final destinations
after a few days of travel across the us
it's a very simple process
from a consumer perspective but the
behind the scenes
is incredibly complex the complexity is
what's needed though
for a business whose whole value
proposition is to get
anything to your door quickly and
cheaply the core of amazon
their competitive advantage is now
logistics
to the point where many experts believe
that the company will start offering
delivery as a
service to other companies in the coming
years they believe that they perfected
their system
enough that they're going to take on ups
and fedex
of course amazon still has competitors
which are going after the company
as aggressively as ever target for
example
has been able to build a delivery system
with similar speed
through completely different means ones
that are far
simpler they've essentially turned each
of their 1900 stores across every u.s
state
into a fulfillment center they send
employees out into the aisles
who pick pack and ship online orders
that means that their packages never
have to travel very far at all
and so they can take advantage of cheap
and quick ground shipping from ups
fedex and other more traditional
providers some eighty percent of the
company's orders are fulfilled directly
from its stores
and now walmart is also adapting this
direct from store fulfillment system
as well so far though amazon believes in
their system of simplicity through
complexity
and they're making moves to further
expand the system within the us
and emulate it in europe where they
recently opened their first air hub in
leipzig
and put their first two freight aircraft
online in november 2020
ups fedex and the other major consumer
delivery companies
are already well aware of just how big a
threat
amazon poses to them amazon has managed
to build a
21st century logistics network using
21st century
techniques and technologies and of
course part of the threat comes from the
company's market dominance
but most is because amazon is innovating
in a way
others aren't the way fedex and ups move
packages today
is largely the same way they did decades
ago but amazon system is only possible
through innovations that allow them to
manage
such a massive complex and convoluted
system
this is all to say if you're worried
about amazon's growing position as the
one-stop shop for the world
be worried because they're only getting
better at it
what amazon's rise proves more than
anything is that
like it or not online is the new main
street
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you should be concerned about how your
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wendover.productions
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