E-Commerce Shipping Update

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By Matt Dickerson
Senior Vice President
JLL Indianapolis

As the post-mortem continues on the 2013 holiday shipping debacle with Amazon and other e-commerce retailers, several larger players feverishly work to replace the “last mile” of package delivery.

In several cities, Amazon executives continue to roll out multiple delivery options with both private contractors and Amazon-employed vehicles. The bottleneck for shipping will continue to grow as several facts impact Amazon’s bottom line and their customers. Over the last decade, ground rates for both UPS and FedEx have climbed annually. The largest increases are being felt over the last five years with annual increases ranging from 3% to 5%. To the dismay of its customer base, Amazon has recently increased membership for its Prime membership program by 25% to offset the increased shipping costs.

“Amazon Logistics” is the replacement service rolling out in several large cities. As a new delivery platform, mistakes will occur and the question of customer satisfaction will be in play. When a customer orders an item on Amazon.com or Walmart.com, two things can be counted on: A) customers want free shipping; B) customers want their items on time. Amazon has launched the same last-mile program in England, also with mixed success.

In December, FedEx Chief Executive, Fred Smith, said that Amazon “can unquestionably do local deliveries should they choose to do so.” However, he said the vast majority of packages would continue to be moved by FedEx, UPS and the Postal Service.

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