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Amazon’s shipping plans to offset rising costs

Friday, February 23, 2018  
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Amazon’s planned foray into last-mile delivery could prove to be a wise move.

Following news last week that it was looking to launch its own shipping solution, a closer look at the e-commerce giant’s spending has revealed just how much its global logistics costs have grown in recent years.

According to research conducted by Data Journalist Felix Richter writing for The Statistics Portal, Amazon’s fulfillment and shipping expenses amounted to $25.3 billion and $21.7 billion respectively last year. This was up from just over $1 billion each a decade earlier.

Comparatively, FY2017 logistics costs amounted to 26.4% of total sales during the year, compared to 16.6% in 2007.

Richter commented: “Introducing its own shipping service would not only give Amazon the chance to keep shipping costs at bay, it would also reduce the risk associated with relying on UPS and FedEx for last-mile delivery.”

He pointed to Amazon’s recent Form 10-K report which stated: “We rely on a limited number of shipping companies to deliver inventory to us and completed orders to our customers. If we are not able to negotiate acceptable terms with these companies or they experience performance problems or other difficulties, it could negatively impact our operating results and customer experience.” 

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