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In 2014, Amazon.com Inc set out to establish its delivery services. According to Bank of America Global Research, Amazon has invested approximately $60 billion on this venture. Jeff Bezos thought it was another way to let their customers have a hassle-free experience.
The commencement of the delivery network started with setting up warehouses, leasing aeroplanes and buying delivery vans. Thus, the goal was to set up one of the biggest delivery companies in the world.
No.1 in Digital Commerce 360 – Top 1000
The idea of setting their delivery service proved fruitful because Amazon soon became more successful. In the midst of 2020, Amazon received the title of being the No.1 delivery service by delivering 2.3 billion parcels.
That means that amazon nearly scored 22% (10.6 billion) of the customers shopping from online retailers. According to the Bank of America, Amazon’s delivery service handled 2.5 billion packages on their own in the international market.
Expanding Amazon’s Delivery Services
Additionally, from what’s being heard, Amazon is looking to expand. The company plans to offer delivery services to other online retailers as well. This means additional deliveries from companies that do not sell from Amazon’s platform.
Thus, according to this, Amazon is estimated to deliver up to 9.5 billion packages by 2025. That would make up a whopping 49% of the online ordered deliveries.
However, Amazon might fail in its latest endeavours. It is because it stands as a business rival for all the business it is set to gain as customers. Thus, these online retailers will resist shifting their delivery system to Amazon’s delivery services. Therefore, Amazon may have to direct these services towards B2B, i.e. ‘business to business’ retailers who don’t see Amazon as a threat.
Consequences Of COVID-19
The ongoing Coronavirus pandemic has nearly derailed economies around the world. This means many businesses had to shut off their activities. However, the company announced in April of 2020, that they are temporarily suspending shipment services. They said the reason was an increased demand due to the pandemic.
Perks of in-house Delivery Services
The company gives extra benefits to its Prime members. This includes free shipping on any Amazon product. This proved to be a genius idea since it increased sales by tenfold.
According to research by Bank of America, the delivery cost is the second most significant consideration made by an online shopper. The first is, of course, the price of the item itself. Furthermore, this reward made deliveries arrive faster. This, in turn, also increased demand for Amazon’s products.
Investment Opportunity
In 2018, Amazon launched a delivery service program. The program offered candidates $10,000 worth of discounts on vans, insurance, uniforms and mobile devices. Furthermore, Amazon acquired 20,000 Mercedes-Benz Sprinter vans for this program alone.
This program enabled about 800 companies to apply. Therefore, there are now 75,000 drivers who have jobs because of this program. Furthermore, Amazon installed 100,000 electric-powered delivery vans in September of 2019. These vans will be operational for delivery from 2021.