Amazon reached an important delivery speed milestone in 2023, according to a blog post from Doug Herrington, CEO of worldwide Amazon stores, and the company is primed to do better in 2024.
Amazon achieved the improved delivery time by focusing on shortening the distance deliveries traveled to reach customers, improving inventory placement and building out its same-day delivery service.
In the United States, Amazon regionalized operations and transportation networks, dividing them into smaller, easier-to-serve districts. As such, Herrington pointed out, the company could better leverage in-region inventory for customers and ship some 600 million more items from in-region fulfillment centers in the 2023 fourth quarter year over year. Shipping from in-region fulfillment centers to delivery stations also helped reduce stops per package and decreased reliance on air transportation. In Europe, Amazon shortened the average distance each package traveled within its middle mile network by 25 kilometers versus 2022.
Herrington wrote:
We focused on inventory placement around the world and worked to stock more of the products our customers want locally, and we expanded our capacity to place these products in the right fulfillment centers in each respective region. This allows us to maintain the broadest selection of products available and enhances our ability to fulfill a customer’s entire order at one time from the Amazon location closest to them.
And we continued to invest in our same-day delivery service, adding nine new dedicated sites and serving 18 additional U.S. cities over the course of the year. We shared our plans last year to double the number of sites in the coming years and currently operate more than 55 dedicated same-day sites across the U.S. These smaller sites are hybrid, part fulfillment center, part delivery station. They allow us to fulfill, sort and deliver products all from one site so we can get products out to our customers even quicker. In the fourth quarter of 2023, we increased the number of items delivered the same day or overnight in the U.S. by more than 65% year over year. In the U.K., more than 70% of Prime member orders arrived the same or next day in the fourth quarter of 2023.
In 2024, Amazon plans to reconfigure its operations network, harnessing the power of AI to exactly place items such in a way that anticipates customer demand, Herrington maintained. The company intends to further expand its same-day delivery to reach more customers. Faster delivery isn’t just a result of moving more quickly within Amazon facilities, Herrington asserted, but also requires adjustment to structure and product placement. Amazon will continue optimizing its operations network to ship more products from locations closer to customers as it refines the regionalization model in part by making adjustments to the fulfillment network. In one initiative, Amazon introduced a robotics storage system called Sequoia to a fulfillment center in Houston. Sequoia allows Amazon to identify and store inventory up to 75% faster than was previously the case and, when integrated with other technologies, reduced order processing time by up to 25%.
With the help of AI, Amazon is boosting the selection of products it keeps as close as possible to customers, Herrington indicated, stocking more everyday essentials that customers order and reorder consistently. In addition, the company is looking to improve its view of incoming inventory to align available products to what customers in that particular region want and need, helping to make product processing more efficient.
The ongoing growth of same-day delivery continues in the U.S. worldwide with the addition of new metro areas. In general, Amazon wants to expand delivery, even if not same day, to hard to reach locations. To boost delivery, Amazon will employ everything from bicycles to drones. As the company advanced the Prime Air drone delivery program Amazon recorded its fastest click-to-delivery time during the fourth quarter from a facility in College Station, TX: 15 minutes and 29 seconds. In 2024, Amazon is expanding Prime Air to the United Kingdom, Italy and a new U.S. location.
