The Real Cost Of E-Commerce Logistics

by MR Magazine Staff

Amazon has been a game changing company in more ways than one. Free two-day shipping is a prime example: Retailers are realizing they must get on board or get left behind, but covering these costs and storing products in close proximity to consumers means tweaking logistics. In 2015, almost 60% of online transactions included free shipping, according to the National Retail Federation. “Any retailer who still is holding on to the past, that shipping isn’t free for me so I can’t offer free shipping, will find themselves not being relevant to the retail world,” said Satish Jindel, president of ShipMatrix, a shipping operations consulting company. Retailers are competing against Amazon, a company willing to lose vast sums of money from shipping, to continue its growth. A GeekWire analysis showed that Amazon lost $7.2 billion from shipping last year, the difference between Amazon’s shipping cost and what they charged for it. They made up for that loss through cloud computing services sales, with a 2016 corporate profit of $2.4 billion. While shipping is costly for Amazon, the company is reducing its transportation expenses on a per package and per order basis every quarter of every year, said Jindel. Read more at Retail Dive.