Amazon.com’s 43% increase in shipping costs

An article in the Wall Street Journal (October 28 2016) titled “Amazon’s Shipping Costs Likely to Surge With Holiday Orders” describes a 43% increase in shipping costs in the third quarter of this year as reported by Amazon.com. The article suggests worries that the flat $99 annual charge for Prime members with free shipping rapidly (even within an hour) and the rising costs faced by the company is cause for concern.  In response the company has increased the number of warehouses, invested in ownership of delivery assets (including 40 airplanes) and increased use of the US Postal service while anticipating that it will ship 700  million packages between Thanksgiving and New Years Eve. Will the revenue growth and margin compensate for the increased shipping costs ? Can Amazon drive down costs by owning delivery assets or are they a tool to negotiate lower shipping costs with UPS and FedEx ? Or will Amazon be forced to increase its fees for Prime services to cover costs ? Will retailers with physical stores have an opportunity to partner with Amazon to create a win-win solution ?

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About aviyer2010

Professor
This entry was posted in Collaboration, competitiveness, consumer, Cost, Ecommerce, logistics, ordering, truck and tagged . Bookmark the permalink.

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