Since its beginning in 1994, Amazon has quickly risen from an online book retailer to a store that sells everything imaginable- hence, their nickname of “The Everything Store.” Their meteoric rise has expanded past their own success to affect the entire e-commerce industry, from shipping and trucking to the decline of brick-and-mortar stores.
Thanks in part to Amazon and other e-commerce giants, shipping in the United States is currently seeing record highs. Due to the increased purchasing of unpredictable sets of items from online retailers, transportation industries are being forced to adapt to Amazon’s practices, such as the purchase of somewhat random small items in order to qualify for free shipping.
The Amazon effect has also affected the increase in the American Trucking Associations’ trucking tonnage index. Trucking is the primary mode of freight travel, and by 2040, trucking is projected to account for 67% of shipping distribution.
The need for truckers and other workers in fulfillment centers also illustrates the impact that shipping growth has had on the job market. Employment of truck drivers is expected to grow 11% from 2012-2022. However, what turns into “free shipping” for the customer isn’t free for Amazon; in fact, in Q3 2012, Amazon reported a loss of $636 million on shipping costs alone.
To reduce these costs, Amazon has built more fulfillment centers near and around central transport hub areas. That way, Amazon can cut down on shipping costs while providing more local jobs, and at the same time, customers enjoy their packages being delivered on a quicker schedule. Deliveries that require less mileage can be hugely successful at the local level; however, when Amazon creates more fulfillment centers and drives their own shipping trucks, organizations like UPS, FedEx, and the USPS lose out.
Finally, Amazon and other online retailers have made it harder for brick-and-mortar stores to open and succeed. While Amazon has grown by leaps and bounds, big box stores like Sears and Best Buy have decreased their revenue, number of employees, and share prices.
People have changed the way they shop, and that’s at least partially due to the Amazon effect. E-commerce companies and other related industries, such as packaging and distribution companies, can strengthen their business plans by modeling after Amazon. Shorr Packaging has put together this informational guide on how The Amazon Effect impacts the shipping and retail industries.
Has your business had to adjust to The Amazon Effect? We’d love to hear your thoughts in the comments below!