Amazon optimizes delivery network to boost speeds and lower costs

Amazon, the largest e-commerce platform globally, has announced plans to optimize its delivery network as it navigates a recovery post-pandemic. The platform plans to increase delivery speeds and minimize costs. The plan also involves lowering the carbon emissions.

Amazon to boost speeds and lower costs

The online retailer issued a statement saying that it had reduced the delivery speed. The company has also transformed its inventory management system and search capabilities to give customers access to items that are closest to them. The move has seen products realizing 12% fewer touchpoints before their delivery.

Amazon has been taking steps to deal with the decline in consumer demand. The ecommerce platform, alongside other online retailers, has been slashing the costs for returns and home delivery to continue meeting their needs and support further business growth.

Earlier this week, Amazon unveiled plans to provide US customers with $10 to pick up their purchase instead of having it delivered to their home address. The company has also made other moves to lower delivery-related costs across all the company operations.

In 2022, Amazon increased the price of the annual Prime subscription, that also includes free shipping benefits by $20. The company also increased the minimum order requirement for free grocery delivery and encouraged customers to have their packages delivered at a particular day of the week. It has also increased the same-day parcel delivery to include a fee for orders below $25.

Amazon is showing interest in AI

Amazon is currently focused on using artificial intelligence to speed up the deliveries. The e-commerce platform is reducing the distance between the products and customers according to a report by CNBC.

The vice president of customer fulfilment and global ops services for North America and Europe at Amazon, Stefano Perego, described how the company was using AI in matters to do with logistics. One of the core areas that the company will focus on is transportation including the mapping and the planning routes. It will also consider other variables at as the weather.

“So now, I’m pretty sure you’re familiar with the vast selection we offer to our customers. Imagine how complex is the problem of deciding where to place that unit of inventory. And to place it in a way that we reduce distance to fulfil to customers, and we increase speed of delivery,” Perego said.

Amazon is also paying attention to lowering delivery costs by shipping the products directly to the customers from the warehouses that are closest to them instead of shipping them from another part of the country. This will require technology that can analyse data and patters to predict the products that will be in demand and where these products will be.

If a product is brought closer to the customer, Amazon will be well-positioned to offer same-day and next-day deliveries like what is offered by Prime subscription services. According to Perego, over 74% of the products ordered by customer come from fulfilment centres within the region.