A new pandemic, the seventh since the Spanish Flu in 1918, has struck humankind and is known as COVID-19. With the initial case being reported in Central Asia, the virus swiftly traveled across the globe. It's no surprise that a variety of companies reacted to the feverish headlines with a range of reactions. There were countless articles filled with predictions of possible outcomes.
Since the beginning of the COVID-19 pandemic, Amazon has been under immense pressure to maintain its operations. The company has faced challenges. They had to face a surge in orders to severe shortages of vital supplies. In response, Amazon has leaned on its advanced logistics system. This helped them to keep their business running.
From Amazon's Air Hubs to its network of third-party logistics providers, the company has a complex system in place to move goods around the world. This system has been crucial in ensuring that Amazon can meet the demands of its customers during the pandemic.
In this article, we'll look at how Amazon's logistics system helped the company during the COVID-19 pandemic.
Amazon's Response To COVID-19
During the covid 19 pandemic, amazing invested a lot in supporting their employees and customers. They also enhanced the safety measures by increasing paid time off. During the pandemic, they gave approximately $2.5 billion in bonuses and incentives to their employees in 2020. Moreover, Amazon established a $25 million relief fund for its partners. Moreover, they also combated prove gouging so that they may give fair pricing to their customers. This made them more profitable as they fought their rivals with lower prices during this testing time.
This is not only it, but they also increase their workers' pay by $2 an hour. And to follow Sop’s amazing ensured that the workers practice social distancing in the warehouses. They made sure that the warehouses were not overcrowded and that everyone could work without spreading the disease.
Amazon previously had a major impact on the economy and the lives of its users, but today its influence is unfathomable. The business declared that its quarterly profits had doubled to $5.2 billion at the end of July 2019. And during this period, Net sales increased by 40%.
Why Amazon's Logistics System Is So Important
Amazon's growth is ongoing. The business sent out 2.5 billion parcels in 2019. Additionally, the business's operations and technology have changed throughout the past three years. Particularly, this aided them in expanding their business. To assist them in coping with this expansion. In other words, the corporation has increased its trucking, warehouse, and air capacities.
Amazon has been using its own package delivery service to send merchandise to its consumers since 2005. This service is known as Amazon Logistics.
The service debuted as a test project in San Francisco, Los Angeles, and New York City more than ten years ago. But today, it's spread to almost all of the US's major cities. Now, it's accessible in countries like India, Brazil, Spain, Italy, Ireland, Germany, Spain, Canada, the UK, and the UK.
Some of the most well-known delivery service companies, such as UPS and FedEx, are competitors of Amazon Logistics.
Amazon used twice as many warehouses, delivery hubs, and drivers in 2020 to manage shipments. Thereby increasing delivery speed while reducing fuel expenses.
- Amazon Logistics' shipments show up as AMZL in the tracking system. When a delivery is made domestically, it is referred to as AMZL US.
- Deliveries with this indication are delivered to a particular sorting facility.
- In these locations, DSPs can deliver goods to customers and pick up shipments at a neighboring facility.
- Drivers may plan, get route directions, and manage customer service. They can do all of this by using Amazon's mobile application and software.
Amazon has positioned the initiative as an opportunity for business owners to invest. They allow them to become Delivery Service Partners (or DSPs for short).
For access to the logistics program, you must be a Prime member. If you did not pay for the prime member, then you can also get this service but with added cost. Third-party merchants can also take advantage of these benefits.
How Amazon's Logistics System Has Changed During the Pandemic
Amazon continued to hire even as the United States dealt with high unemployment and financial instability. To be able to complete consumer orders, the corporation hired more than 175,000 extra warehouses. They also hired some extra delivery personnel between March and mid-April.
Amazon was initially unprepared for the sudden surge of orders. The business found it difficult to stick to its coveted two-day delivery timeframe. High-demand items like paper towels and hand sanitizer quickly ran out. But they fought back against widespread price gouging. They hurried to change how things were done inside its warehouses. This preserved worker safety without materially slowing down job flow.
Global corporations like Amazon are typically ready for conceivable supply chain interruptions. But they were surely not ready for this one. Even Amazon was unable to maintain operations despite having vast end-to-end logistics. Even with countless warehouses, trucks, and vans, they could not keep up with the demand.
Amazon told its sellers that some products, such as hand sanitizer and paper towels, would remain in their warehouses. This is because they wanted to fulfill the demands.
Amazon and Its Logistics Service Today?
Amazon is still attempting to recover from its inventory interruptions months later. There was a backlog of incoming shipments after it started permitting unnecessary items.
The epidemic showed us that Amazon's decision to internalize its fulfillment operations might be a blessing and curse. Individual merchants can send their goods to an Amazon warehouse. They can do it by using Fulfillment by Amazon.
When costs for everything fell, from commercial real estate to cargo planes, Amazon took advantage of the situation. However, its goals go well beyond simply serving its own clients with packages. The business is developing a logistics system to deliver products one day. This will help them to compete directly against UPS and FedEx. Amazon stated on a recent earnings call that it increased its fulfillment capacity by 50%. As a result, they were able to fund $30 billion in total capital expenditures.
Many companies have struggled during the COVID-19 pandemic. But Amazon has been able to use its logistics system to stay afloat. Amazon has been able to use its vast network of warehouses and distribution centers. This helped him to keep its operations running smoothly. It has also been able to utilize its Amazon Advertising services to reach a wider audience and keep its sales up.
Amazon has thoroughly analyzed the shipping routes used by its partners.
For businesses like UPS, a route is more profitable the more populated a region is. Drivers can transport more packages in less time, which also lowers other costs like fuel use. For many of its more expensive rural deliveries, Amazon has chosen to work with other partners, primarily the Postal Service.
Amazon lowers costs by focusing on high-density areas. They sprinkle delivery stations around the urban market. This allows them to rely less on other shipping businesses. Along with its own shipping operations, Amazon also makes money via its shipping partners.