How Amazon Delivers On One-Day Shipping

Before Prime launched in 2005 one-day
shipping was an exorbitant luxury. Now it’s the standard shipping speed
for Amazon’s 100 million Prime members. Earlier this year Amazon doubled
the speed of Prime shipping from two days to one. And the faster speed is now available
on more than 10 million products. Prime one-day is basically going to A)
keep up with the brick and mortar guys and B) enhance Prime. Amazon has changed
the game completely. So what they excel at is getting an
object from a creator to a consumer as flawlessly as they can and
as quickly as they can. So Amazon is changing people’s
expectations and they’re perpetually improving those expectations. But behind every Amazon box there are lots
of people hustling and a lot of money spent to get it to
you in just one day. Here’s what happens when you buy
a Prime eligible item on Amazon spends tens of billions
on shipping every year. In just the last quarter of
2018, Amazon’s shipping costs jumped 23%, reaching a record $9 billion. So why is it worth it? Well customers come to expect consistent
fast delivery of anything on earth from Amazon. And our job is to
continue to make that happen. And Amazon set aside $800 million just
in the second quarter of 2019 to start making one-day
shipping the norm. Most of that investment is
going towards the infrastructure and transportation costs associated with speeding
up delivery to the millions of Prime customers who are about to
begin to experience one-day as the new normal. The difference with e-commerce is
the costs never end. The pick, pack and ship happens every
time a unit is sent out. To better control this process and its
large cost, Amazon is cutting down its reliance on UPS and the U.S. Postal Service and is investing heavily
in its own logistics network. It now handles the shipping
for 26% of online orders. Amazon now has at least 50
airplanes, 300 semi-trucks, 20,000 delivery vans and it operates ocean
freight services between the U.S. and China. Amazon is looking to do it all. That shouldn’t be much of a surprise. The only thing that matters to Amazon
is making sure the customer is happy and is paying for Prime
every year or every month. What that means is sometimes you can rely
on partners but you want to make sure that you have it in your
pocket if that’s not the case. Other big retailers are also spending a
lot to keep up with the fast shipping expectations Amazon
has created. Walmart is rolling out free next-day shipping
with orders of 35 dollars or more starting today. And target offers free two-day shipping
on orders over 35 dollars. And during Amazon’s big Prime Day sales
event July 15th and 16th, eBay plans to hold a crash sale
offering 80% off big ticket items. Amazon’s 25 years old. The reality is that’s a really short time
to be around to have become the number one player. So can anyone compete? Sure people can compete. Can they sustainably compete
is the harder question. I don’t think we’ve seen it yet. The journey a package takes to your
door starts before you even place the order. Most items on Amazon are sold
directly to you by a third party. In Jeff Bezos’ letter to shareholders
in April 2019, he said third-party sales have grown from 3% of total
merchandise sales in 1999 to 58% in 2018. Amazon charges those sellers a
fee to list items on starting around 15% of
the item’s selling price. Amazon also sells things directly. In some cases Amazon buys inventory from
a third party and then sells it to consumers. Other items are Amazon’s own brands
such as Amazon Basics, Amazon Essentials, fashion lines like Lark & Ro
and Alexa devices like the Echo. All items sold directly by Amazon
are already sitting in an Amazon warehouse waiting to be
ordered and shipped. Most third-party items fulfilled by Amazon
are also already waiting at an Amazon warehouse, while others are sent directly
from the seller or to an Amazon warehouse once you hit
that place order button. Amazon does not disclose the
details of its inventory strategy. Figuring out where a product sits before
you buy it is a phenomenal mystery. It’s something that every
reseller would love to know. And figuring out the code that is
Amazon has been part of that hard process. After an item is ordered and ready
at one of Amazon’s 175 fulfillment centers around the globe, it’s picked, packaged
and shipped by some of its 250,000 warehouse workers often with help
from one of its 100,000 robots. It’s essentially an amusement
park for a box. There’s conveyor belts that go
around, there are slides. It looks like a lot of fun. But the question is: how much is
automated versus how much his manual labor? And that suite, blending that, figuring
out how to have the least human touch points while ensuring the
best quality control is that perpetual conversation. We visited a fulfillment center outside
Seattle where 2,000 workers prepare packages on a couple million
square feet of floor space. Workers here showed us the process of
getting an item from the shelves to a box. We scan the item and make sure that
that item is what matches what’s in our hand that’s on the screen and then
we stow it into a bin. And then there’s cameras here that take
pictures of where our hands go of where we place the item. I am a picker so I pick product that
will end up going down to the packing department and then they pack it out
and send it to our customers. I need to put it into a box. It actually tells me what
type of box it is. Tape. Put the item in there. Scan it through. Drop
it down the line. Amazon says it’s 100,000 robots inside
the fulfillment centers help make this whole process more efficient. In 2012 Amazon bought robotics company
Kiva for $775 million and started using robots in its fulfillment
centers a couple years later. Now there’s driving robots that move
inventory around, robotic arms that lift boxes and pallets and even a
new robot that can package items in custom-sized boxes. If it wasn’t for them then I’d have to
walk and I’d much rather be up here in my own little world picking
then walking up and down. So I love the robots. As technology continues to change
how fulfillment centers function, Amazon just announced it will spend $700 million
to retrain a third of its U.S. workforce by 2025 to move
them to more advanced jobs. After an order leaves the fulfillment center
it has to get across the country or world to another
warehouse in your region. Some boxes are sent via one of
the shipping giants, but Amazon is cutting costs by sending packages in at least
300 of its own semi-trucks and now dozens of its own planes. We’ve been building out an air network
for a number of years now. That coupled with our partners networks, we’re in
a place we have a lot of incremental capacity to be able to
advance packages for customers much faster than we were two
or three years ago. Amazon broke ground on a new 1.5 billion dollar air hub in
Northern Kentucky in May. It has capacity for 100 planes. One of the great things about customers
all over the world: they are divinely discontent. You give them the
best service you can. They love it. But they always want
a little bit more. We’re going to move Prime from two-day to
one-day and this hub is a big part of that. After an item arrives near your city
it waits in another warehouse like this one for a delivery person to pick it
up and take it that last mile to your door. We’ve been building for over 20
years to support this network that’s eventually just constantly getting faster and
we knew would begin to migrate to a one-day service. The big difference for us is all
about how we get product from our fulfillment center to
that last-mile location. Last-mile is the most expensive
part of the delivery process. Until an item arrives at a warehouse near
your home, it can be shipped in bulk. But then each package needs to
be hand delivered to a different address, which takes a lot of
people and a lot of time. Amazon pays to outsource much of
last-mile delivery to carriers like UPS and USPS, which charge a fee,
and those fees just went up. In January the post office increased
its last-mile shipping rate by nine to 12% depending on package size. The more Amazon can keep last-mile
delivery in-house, the more it can control these costs. To do that Amazon uses small
business partners, some delivering out of 20,000 Amazon vans. And in 2015 it launched Amazon Flex. I’ve been driving for Amazon Flex roughly since
2016 on and off, I’d say at least two solid years. Amazon Flex is available
in about 50 U.S. cities. Anyone over 21 with a
driver’s license, auto insurance and at least a mid-size sedan can sign up. After clearing a basic background check,
drivers in areas with open spots can start picking up
and delivering packages. Drivers use the Flex app to sign up
for a block, which ranges from three to six hours. Then they head to a warehouse where
they find out how many boxes they’ve been assigned to deliver
in that timeframe. Amazon advertises that drivers make $18
to $25 an hour and they’re responsible for their own vehicle costs
like gas, tolls and maintenance. Amazon wouldn’t disclose how many drivers
have signed up or what percentage of its last-mile deliveries are
made by Flex drivers compared to its shipping partners. But it did tell us their
last mile delivery programs are expanding. We’ve built out these small businesses,
the delivery service providers, and we have Flex which is
our on-demand crowdsourced delivery piece. So we need all of that to meet the
various types of delivery we do in each of our geographies and I think you’re
going to see expansion on all fronts there. Amazon has one unusual approach to
increase its number of small business partners helping with last-mile. Amazon says it will contribute as
much as 10,000 thousand dollars if full-time employees want to leave the
company and start their own package delivery services. Early response is great. It allows us to complement the capacity
that we have with our great carrier partners. It’s great for some of our employees who
don’t want to do the same thing that they’ve been doing in the warehouse
for five or 10 years. They want to learn some new skills
and over 16,000 employees have already taking us up on this. Amazon is also looking at several
high-tech solutions to streamline last mile delivery. In June, Amazon announced its new
autonomous delivery drone will be operating within months and it has a
one year FAA permit to test them. We’re building fully electric drones that can
fly up to 15 miles and deliver packages under five pounds to
customers in under 30 minutes. Amazon also has patents out for a
giant flying warehouse and drones that can react to flailing
hands and screaming voices. And it’s even testing a sidewalk
robot called Scout to bring packages right to your door. All these steps are an incredible
challenge to pull off. In recent years, Amazon has faced an
onslaught of negative press about working conditions at every
step of the process. We spoke to several
workers about their concerns. The working conditions at Amazon
are dangerous and that’s systemic. I’ve worked in five different buildings
in three different states from coast to coast and
it’s the same everywhere. It might not be outright exploitation but
it is almost like a disposable workforce. It’s been so pervasive that many of the
pilots, in fact most of the pilots at our airlines are
actively seeking employment elsewhere. Last year Amazon raised the minimum wage
to fifteen dollars for all its 350,000 U.S. employees, more than double the
federal minimum wage of $7.25. In his annual letter to shareholders,
owner Jeff Bezos challenged other top retail companies to match this. And Amazon offers generous benefits. I needed my medical insurance. That’s what’s essentially kept
me at Amazon. But some workers, most who asked
to remain anonymous, told us Amazon expects them to keep up
a fast, often unreasonable pace. They say that they care
about their employees and quality. But no, it’s really
just about numbers. You have to make not only a certain
rate but you can’t accrue more than 30 minutes of time-off-task per day
otherwise you get written up. Usually most buildings are at
least a million square feet. You could be walking three to five
minutes each way to go to bathroom. So if you went to the bathroom twice
you could easily use up that 30 minutes. So a lot of people
don’t go to the bathroom. CNBC was connected to Fuller through
the Retail, Wholesale and Department Store Union. Although he’s not a union member. We asked Amazon about the
working conditions in fulfillment centers. We have world class facilities, we
have restrooms all over this place. We have break rooms. We have TVs. Anybody who is watching, don’t
take my word for it. Please come take a tour
and see for yourself. I’ll put us up
against anybody any day. Do you feel like the pace that workers
are asked to work out is reasonable? Well our, the way we look at
productivity rates, just like anyone, we have expectations. In every job, my job
has expectations, your job has the expectations. The way we set the rates
and the processes are based on actual performance and the overwhelming majority
of employees are able to meet those expectations. Warehouse workers told us their productivity
is closely tracked based on how often they scan a package. Workers told us they can get written
up if they don’t meet certain metrics. Amazon also has patents for a
GPS-enabled wristband that could track workers’ movements and breaks. I think too often people look at
that technology and sort of debate, is this Big Brother tracking an employee
or something to that effect? And you know really almost all the
time you look at these wearables or other types of things like that,
they’re usually some form of safety device. Workers can lose their jobs if
they don’t work fast enough. At one warehouse in Baltimore, The
Verge reported that Amazon terminated 300 full-time associates in a one-year
period between 2017 and 2018 for inefficiency. Amazon said in a statement
that “the number of employee terminations have decreased over the last
two years at our Baltimore facility as well as
across North America.” Amazon workers are under attack. What do
we do? Stand up, fight back. There have been several protests in the
last few years around the world where Amazon workers have
demanded better working conditions. In orientation they
talked about safety. That was the number one thing. Safety. And you get
there and that’s forgotten. In the UK, ambulances were called to
Amazon warehouses 600 times from 2015 to 2018. In April, the National Council
for Occupational Safety and Health identified Amazon as one of a
“dirty dozen” companies, citing six deaths in seven months and
13 deaths since 2013. But Amazon says that last year alone
it spent $55 million in safety improvements at fulfillment centers and its
employees got a million hours of safety training. As Amazon increases the shipping speed,
can they also increase conditions to be more fair, equitable and
sustainable as far as safety goes? Well I’m incredibly proud of the safety
record of our sites and the focus of our leadership team on safety. Any incident is one too many and
anytime something happens, our teams come together and figure out what happened and get
to the root cause and try to eliminate anything from occurring
again in the future. Amazon Air is another area where growth
in the program has led to challenges. Amazon-branded planes are flown
by contract pilots from Atlas Air, ABX and Southern Air. These airlines negotiate contracts
with the pilots. And five of these pilots told
us working conditions have deteriorated since their airlines started
flying for Amazon. As a result of Amazon being such a
large company, they have the ability to put a very strong pressure on our
companies and have them drive down our pay and working conditions as pilots. Dan Wells heads up the
union that represents these pilots. They protested outside Amazon’s annual
shareholder meeting in May. They also spoke out in April against
poor working conditions and low pay near the new Amazon air hub. We have a hard time
maintaining enough qualified pilots. There’s a tremendous amount of turnover
at these carriers which in net reduces experience and creates a lot of
stress on things, a lot of frustration, which certainly distracts people
from their duties as pilots. In February, an Amazon Air plane
operated by Atlas Air crashed near Houston, killing all
three pilots aboard. The cause of the crash is
under investigation with initial National Transportation Safety Board findings showing
the pilots may have lost control of the plane. In interviews with Business Insider
weeks before, several Amazon Air pilots said they thought
an accident was inevitable. They cited low wages that made
it difficult to attract experienced pilots, training they considered shoddy,
fatigue and poor morale. Pilots that are working for
Amazon’s contractors are overwrought with schedules and scheduling changes
and constant training. All of those things have added to
greatly increasing the risk in the cargo system that we fly in. In a statement Amazon said, “All
of our airline delivery providers must comply with the Amazon Supplier Code
of Conduct and Federal Aviation Administration regulations. We take seriously any allegation that
a delivery provider is not meeting those requirements and expectations
and review accordingly.” Workers bringing packages that last mile to
your door also told us safety is a concern. One reason: Amazon doesn’t provide Flex
drivers with any branded clothing to identify them. I’m pulling up to this house and I get
to the front door and you know this guy just comes running out like,
“Hey what are you doing?” and he’s talking so fast and I
was thinking you know I’m in Connecticut. You know I’m a Puerto Rican guy in
a white guy’s yard and like, you know, what if he just comes out and
shoots me in the face without asking questions? You know that was my fear. After another delivery where he says
a customer let his German Shepherd charge at him, Jonathan paid 45 dollars out
of his own pocket for a custom sweater on Etsy. I think Amazon the least they could do
is give us something that would make it a little bit safer and make
us more visible when we’re out there delivering. I’ve gotten a lot of mean glares
from people because they’re like, “Who is this guy? He’s just in front of my driveway or he’s
parked in front of my house. He’s just wearing a yellow vest.” You don’t even have to
wear that vest. It’s just, I do it because at
least I look less suspicious. In a statement Amazon said, “They are
welcome to wear the safety vests that we have available for them in the
delivery stations while they’re on their route which can help
customers identify Flex participants.”. And some drivers told us the way
the Flex app works encourages distracted driving because it requires drivers to
manually tap refresh to secure their next assignment. If you want to get blocks then you
have to be tapping on that refresh button in the app
pretty much constantly. But how do you do
that while you’re delivering? So it encourages people to
do it while they’re driving. In a statement Amazon says, “Safety is our
top priority and we are proud of our safe driving record. We regularly communicate a variety of
safety topics including loading and driving practices with drivers. Amazon Flex participants can also sign up
for delivery blocks up to a week in advance through the
Amazon Flex app.” Amazon is working to ease the burden
on its delivery drivers and save money with high-tech solutions like those drones
and Scout sidewalk robots, and its fulfillment centers are
becoming more automated, too. Our focus on automation has really been
begin in automation in the places that can be most
beneficial to the workforce. Remove the most tedious task, remove
the heaviest lifting task, whether that be lifting large containers or
bringing the inventory to the associate so they don’t have to
walk through Earth’s most massive selection in order to find
the thing they’re looking for. But for now Amazon still relies on people
to bring us our packages in just one day. And with expectations for
rapid delivery only growing, Amazon will need to continue innovating
to make shipping even faster. We will see shipping
speeds increase every day. The announcement that Amazon is going
to one-day is ironic because in certain regions we have it
in an hour already. That’s not going to stop. And what’s absolutely critical is any
company that sticks their head in the sand even if it’s Amazon. We’ll see the competition
pass them by. That’s the one guarantee
we have in retail.

100 thoughts on “How Amazon Delivers On One-Day Shipping

  1. I bet the majority of these Amazon workers complaining about poor working conditions are the same ones that complain about having to show up on time or even to show up for that matter.

  2. Amazon is definitely more reliable than Netflix or Sky. On Netflix or Sky, you'll pay for subscription and then some days they remove a movie/series/channel because "that's my location country's fault".

    Amazon Prime always delivered stuff to me without any problems, the Amazon drivers are driving really good here at Germany and the prices have usually the cheapest prices when it comes to electronics, food and other products

  3. I am a amazon prime member, i like amazon and flipkart so much. But their is a huge difference. Amazon apps has to be change , dont like use of amazon apps i mean to say not that much flexible like flipkart so amazon please change your application just update of it

  4. "I love the robots because I don't have to walk" This is how the robots will take over the world, were just letting them do it with a big ole smile on our face.

  5. Amazon is just a test for the controllers to see how the masses accept these automated technology that will get rid of humans

  6. Biden is an absolute clown, forget about all those fake politicians. Yang2020 is the BEST Choice for America. -this message was approve by Tyler Nguyen

  7. They hire anyone without an interview. That's the issue. Of course they fired 300 people for being too slow, your grandma ain't built to work in a warehouse.

  8. You telling me rich is this company is that it cannot pay the drivers for driving and delivering things they have to be responsible for the vehicles you know maintenance on the car it's sad that you will be that greedy that you won't support the drivers with the gas and maintenance for the vehicle that's just completely greedy

  9. I feel sorry for your workers I really do people working to survive and to provide it's sad that you will be that greedy an Evil Hearted to where you do not care about your employees it's at that you would do that to people you do not know how they live you do not know how hard it is to survive maybe you forgot maybe you was born with but you're wrong for that you may not believe in God but you will answer to what you do wrong to people that's under you just because Who You Are

  10. Warning for those who want to work there part time: Amazon doesn't offer medical insurance for those who work part time. I'm sorry but I have to warn you

  11. @cnbc I would add there is a huge carbon cost to 1 day shipping as well… Most of those packages wouldn't be flying on a plane if it were not for amazon!

  12. This constant push for retailers to one-up each other is not worth the suffering and injury you can bring on to your employees. I think 2day shipping is fine. It just means the buyers have to plan ahead on their purchases and if you really need it 1 day pay a premium.

  13. 15:46 I work in the aviation industry and pilots are the highest-paid professional aside from the radar controllers and air traffic controllers, etc.. I've never seen a pilot protesting ever in my entire life (in a very professional way. haha), but to actually see that Amazon pilots are protesting, the workload must be pretty rough. Pilots need a lot of rest because flying a massive plane is not an easy job. You constantly think and communicate at the same time. Jet lags are also a concern. People should not demand 1-day delivery. 2-3 days is okay. I hope there is an improvement to the system.

  14. Just imagine you live by yourself and you open your refrigerator and there’s already a steamy hot pizza that you were just thinking about and when you take the first bite, you get an Amazon notification saying enjoy the Pizza haha

  15. Its a business! Efficiency is a must in any business. Plus I’m sure they have a median they follow. They are just looking at ways to attack the biggest business. They pay better than any company and are raising the metrics. Focus on that. Money is important to employees and the business!

  16. High turnover in any area though, needs to be looked at. Like the aviation sector. Pilots are the hardest worked and the most stress and responsibilities. But pilot training is by the parent company because they are outsourced so its not the pilots.

  17. In the USA the Drivers should have weapons, so they can defend them selves against German Shepards or nervous recipients – just for security reasons! 😀

  18. it's absolute MADNESS… i mean, come on people.. how spoiled do you have to be to "HAVE TO GET YOUR PRODUCT IN ONE DAY!!!!!!!!"
    This is why the average American is 2 paychecks away from bankruptcy not to mention BROKE!!!!!!

  19. Amazon needs to indicate country of origin, WSJ article today. selling chinese – unregulated – uncurated, junk. Buy Direct. And Made in the USA.

  20. Amazon needs to indicate country of origin, WSJ article today. selling chinese – unregulated – uncurated, junk. Buy Direct. And Made in the USA.

  21. CNBC must find a way to put politic in this documentary who started very interesting.
    "They fired 300 workers in one year".
    I fired 50 workers in one month.
    Work like a man or woman or go back in your lazy life.
    Liberal crybaby.

  22. Amazon one day shipping. Lately, it doesn't arrive. On day two they pretend nothing happened. There's no recourse. I'm waiting on three items promising one day shipping, and none have arrived in two days yet.
    Sometimes two day free shipping doesn't show up either. You'll get an e-mail saying, "Something went wrong, we're working hard to find your order."
    The bottom line is, Amazon doesn't care too much, there's no one to call.

  23. One-day shipping. Yet one more reason why it's a waste of time trying to stop climate change. Our lifestyles will never go backwards. Every new concept involves more eWaste, more moving parts, more complication, more energy consumption and more C02.

  24. 5:32 LAMO u work that slow, weLL you might as well pack your own staff too

  25. I'm starting a small business on Amazon next year (and don't worry I'm NOT sourcing from Asia). I would love to know how people already working with amazon feel about doing business with them please. Any advise is appreciated

  26. do some research before you spill your fake news. amazon advertises 2 day shipping but on average takes 4 to 7 days. I odere from them all the time in fact I have a 2 day package that is coming to day that I ordered 7 days ago. and as far as guaranty 2 day that is all it is that guaranty 2 days will go buy and the package will be marked as shipped on their site and not realy have shipped.

  27. For international items (items coming from China for example), how do they handle the customs so fast? Doesn't each and every item get inspected by the customs authority at the airport? That should be time consuming.

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  29. Most Canadians are patient and willing to wait a few extra days. The infrastructure and extra work required for same day or next day hotshot deliver is not really economical nor will it ever be. Someone or something has to pay extra for such rushed delivery service. Extra environmental costs, unpaid employee overtime, over work and higher chances of mistakes. Only people who seem to want everything yesterday are the super rich.

  30. Easy. It DOESN'T work. Got a guaranteed one day shipping date. Package is now two days late. Sure the refund is nice, but nicer would be a system that works.

  31. This works because is truckers drive and wait around for loads 24/7 365 and drive way over our legal hours limits! Even tho Amazon will say we dont want you driving over your hours lol yeah right that's why they hire independents to do the trucking because when something happens the small company takes all the liability

  32. The guy talking about going to the bathroom bugged me the way he said "go to bathroom" and he basically said wahh I'm expected to work wahh

  33. Safety Safety Safety. That is all companies in warehouse jobs say. I work in a company that is owned by foreigners. The company smells when you walk in. Trash is everywhere. Fork life drivers don't care. Stock items are everywhere in the walk ways. All they care about is faster and faster production and sales. NOT EMPLOYEES. It's like the Industrial Ages of 1890's and Early 1900's.

  34. As for the working conditions, if you are not already aware (which means you are probably one of them) at least 20% of the general working-age population is pretty much useless due to being just stupid, lazy or have mental and health issues that make them functionally incapable of being competent employees. Fortunately for this incompetent 20% group, a large percentage are able to eventually find employment in Federal, state and local government.

  35. Easy…they get suckers to use their own vehicles and gas and pay them literally pennies per package. A package that would cost 5-6 bucks through the post office costs them 30 cents through a poor unsuspecting sucker. The poor citizen thinks he is making money due to poor math skills and business knowledge. When the driver finally finds out he isn't winning and quits…Amazon just moves on to the next dummy.

  36. Around here if we see someone on our driveway during daylight hours we go out and say hello. Sad that there are places where people are suspicious of others.

  37. Can I use my non-covered pick-up? It'd be good for fridges or grills.
    "More than double."
    7.25+7.25=14.50, Amazon's new minimum $15, it's only 50 cents. The inflection sounds like they're making huge bit over double.

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