Here’s a quote frequently tied to Jeff Bezos with respect to focusing on the customer relationship:
“If there’s one reason we have done better than that of our peers in the Internet space over the last six years, it is because we have focused like a laser on the customer experience, and that really does matter, I think, in any business. It certainly matters online, where word-of-mouth is so very, very powerful.”
The Amazon founder’s commitment to the customer experience grew partially from a disastrous 2013 holiday shipping season when Amazon experienced unexpectedly high shipment volume which swamped the parcel carriers. When some gifts didn’t arrive before Christmas, Amazon’s reputation took a beating. It should be noted that the carriers faced an incredible challenge with Amazon far exceeding project volume, and that was not the fault of the carriers.
Soon after this ugly experience, Amazon committed to eventually taking control of logistics, and specifically, home delivery. Since that time, hundreds of fulfillment, sortation, and local delivery terminals have been constructed to feed their own last-mile delivery carrier, Amazon Delivery Service Partners.
3PL Companies Fulfilling Amazon Orders
Today, according to MWPVL International, Amazon delivers over 70 percent of their own orders, not including the shipments of marketplace customers that self-fulfill. MWPVL also says that Amazon could very well be fulfilling up to 85 percent of their own orders within the next 18 months. On the surface, it sure looks like Amazon is abandoning all 3rd party logistics service providers.
However, that is not the case. Amazon still uses e-commerce 3PLs to fulfill product orders under the following circumstances:
- To fulfill orders for Prime marketplace merchants that use Fulfillment by Amazon. These orders are usually shipped via UPS.
- Prime marketplace merchants that self-fulfill still use 3PLs to ship their products across UPS, FedEx, and the USPS.
- Amazon still fulfills a portion of their own, non-marketplace merchant orders via 3PLs.
Now, these definitions are nuanced and a bit confusing. To simplify this, just understand that Amazon has not seized total control of fulfillment and still uses 3PLs, like my partners at Newegg Logistics, to fulfill retail orders.
By placing restrictive rules on sellers, Amazon is also making it harder for Prime Marketplace Merchants to self-fulfill in-an-effort to drive these self-fulfilling marketplace merchants to the Fulfillment by Amazon solution.
While Amazon has greatly reduced its reliance on 3rd party logistics service providers, the e-commerce giant still needs help from order fulfillment vendors and some 3rd party carrier support, especially through the busy holiday-shipping season. Yes, Amazon has morphed into a logistics giant, but still needs some help from the 3rd party order fulfilment business community.