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Amazon is increasing ROI by shipping over 70% of their own packages

(NEWS) Amazon is a force to be reckoned with when it comes to free 2-day shipping, but how do they do it and why is it increasing gross margin?

Amazon package

Have you ever wondered how Amazon does it? How do they ship things so quickly compared to other retailers like Wal-Mart or Target?  This question looms large amidst all the shipping delays many companies are facing this holiday season. The answer: Amazon is bypassing the middle man on the supply chain. In effect, they are morphing into the middle man. From one exchange point to another, they are taking hold of the logistical process for their own package delivery.

Not only has Amazon pre-purchased what they expect to be popular items and shipped them in early, but they are chartering their own planes, making their own shipping containers (which are in short supply), and chartering ships to less popular ports in the supply chain in order to bypass the issues many companies are facing. The sign-on bonus for seasonal employees has also increased to combat the labor shortage. It seems Amazon has anticipated every issue they could face along the supply route to ensure the impact for their company is minimal. They are even expected to start selling available cargo space to other companies that are trying to ship goods from overseas to the United States.

The only thing the retail giant hasn’t started doing is manufacturing their own products. Most of their products are still coming from China. The logistics of shipping and selling items could be bypassed if they looked at manufacturing their own products. If you’ve seen the Amazon Basics products you may have assumed that they make those products, but actually, they buy them in bulk and slap their label on them before sending you that new set of kitchen utensils. Yes, the cost of labor and products would dramatically increase. Everyone knows it’s cheaper to buy products overseas and ship them in, but the real question is, should it be? Is this the right choice?  This may be another rant for another day, but it is worth considering as we buy for our loved ones this Christmas.

In lieu of manufacturing their own products, Amazon offers fulfillment services for businesses. You can sign up and let Amazon package and ship your items. This service can help your business grow by giving you a wider audience. It also can add credibility to your company when they can purchase it through a well-known and trusted site, like Amazon.

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What can we learn from Amazon’s model of success? Simple, anticipation. Sit down with a pen and paper and write out all the steps you go through with your business. With each step, ask yourself where could this go wrong and how can I combat this possible issue, should it arise. If you have the forethought to consider where the issues may arise and how you can solve them you’ll be ready to tackle any problem that surfaces.

Jessica Martin escaped from Texas to Austin to receive her degree in English from the University of Texas. When she isn't writing, you can find her outside playing with her kids, camera in hand.

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