The Amazon Effect affects everything, including the supply chain
When making a purchase — whether it’s a holiday or birthday gift, a big-ticket item or basic household supplies — do you wait for the sales circulars in the Sunday newspaper, then hop in your car and drive to the nearest shopping center? Or are you one of the roughly 55 percent of Americans who turn to Amazon.com for product information, customer reviews and online shopping?
Amazon is the King of e-Commerce. In 2016, online sales increased 11 percent for holiday purchases compared to 2015; and Amazon totaled over 40 percent of those online holiday purchases. While brick-and-mortar businesses have been struggling and even closing, online sales have boomed. This threat to the traditional retail store is called the Amazon Effect and it’s unstoppable.
The Saturday shopping mall excursion still provides “retail therapy” for some, but many consumers prefer the ease and convenience of shopping from their home computer, tablet or smartphone. Just point, click and ship and your package is sent straight to your door — no driving, parking, long lines or empty shelves.
The Amazon Effect has enormous impact on the logistics and supply chain industry. Small parcel delivery companies are busier than ever, and big trucking companies are doing well, too, shipping from manufacturer to distributor and fulfillment warehouses. Amazon has set customers’ expectations very high for quick delivery, and is forcing third-party logistics companies to step up their game in three crucial areas:
- Service: Online buyers have become accustomed to frictionless shopping, placing an order with confidence and receiving it days later. 3PLs have to keep pace with Amazon, guaranteeing timely delivery and excellent customer service. At Jarrett Logistics Systems, our logistics professionals facilitate our customers’ shipments, finding the best routes at the best rates and keeping them informed every step of the way.
- Visibility: By tracking the buyer’s package from order processing through final delivery, Amazon has conditioned buyers to expect complete transparency on the status of their purchases. Logistics companies that don’t provide tracking and reports will lose customers to those that share information and manage expectations. Our transportation management system, jShip, provides complete supply chain visibility to our clients.
- Convenience: Amazon provides shoppers with a seemingly endless array of products, all from one website. Consumers no longer have to drive to the mall, the grocery, the hardware store and the drugstore. They place their order and don’t have to spend their time in a car, running errands. And when their purchase is delivered, it comes right to their front door. Online shoppers are willing to pay extra for final mile, white glove delivery. PackShip Furniture Direct, part of the Jarrett Companies family, provides shipping and white glove delivery of large, bulky, high-value home furnishings. This kind of service is what shoppers have come to expect.
The Amazon Effect is more than just a threat to traditional retail shopping. This is changing the market as it relates to not only shopping, but also transportation, order fulfillment and the supply chain. Jarrett Logistics excels at all three crucial areas: service, visibility and convenience. Does your logistics provider?
Michael Jarrett is founder and president at Jarrett Logistics Systems and PackShip USA