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How to Ship Like Amazon

Jun 2020
Nikolay Pasholok
Product Owner, Calcurates
When it comes to shipping, few do it better than Amazon. The e-commerce giant has all but monopolized the market, making it difficult for smaller businesses to compete against, but there are always silver linings. Amazon has poured many resources into developing one of the best delivery services globally, but its elements are easily scalable to fit a smaller business. Store owners now have a free, well-rounded model of how shipping should work and all the building blocks to create a similar service.

Despite being one of the biggest corporations, it employs major US carriers for most of its deliveries. For clients like Amazon, shipping companies are willing to offer better rates and flexible work hours to accommodate the demanding delivery schedule. Such discounts and services are exclusive and provided, based on an unprecedented order volume and are unavailable to smaller businesses.

So, how does Amazon shipping work? Let's find out.

Shipping Carriers That Work With Amazon

While Amazon plans to develop a shipping company to handle all deliveries, for now, the e-commerce giant uses mostly third-parties to fulfill orders. The company does use smaller local carriers like OnTrac or A1 Courier Services to make deliveries to addresses close to Amazon's fulfillment centers. Still, the main bulk of the shipments is distributed among the major carriers. UPS has the largest share of the three with USPS, DHL, and FedEx being used depending on the delivery time, weight, and destination.

Many sellers have previous experience working with carriers and know how to ship with UPS; Amazon, however, imposes its own rules. Buyers don't have an option to choose the preferred carrier. Instead, they select the time frame they want to have their item delivered, and the seller chooses the optimal shipping service for the task. That gives much flexibility to Amazon, who can seamlessly integrate their couriers and partnered shipping carriers without introducing a dedicated option for the customer.

To alleviate some of the costs of working with big carriers, Amazon is developing its network of partnered shipping carriers called Amazon Logistics. They offer aspiring entrepreneurs to become their official partners with a guaranteed order volume, a dedicated Amazon Logistics customer service, and extensive help in building, setting up, and running the delivery business. In exchange, the company must operate according to Amazon's guidelines, provide the services at specific rates, and work exclusively with Amazon.

Amazon International Shipping

Even for giants like Amazon, international shipping is challenging. The company previously used regional stores with dedicated websites like amazon.de to ship to a limited list of countries, but lately, Amazon's international strategy has changed. Now, anyone can order internationally straight from the website or through the Amazon app in their language and currency.

Amazon even offers free shipping for Prime members on eligible orders. The company does not disclose the specific criteria, but the customer will see the FREE AmazonGlobal Standard Shipping option during checkout for all the eligible items.

Amazon still employs companies like UPS and DHL for the most part but also work with local carriers and postal services for certain international orders.

Customers don't need to worry about hidden fees and customs duties; now, Amazon automatically calculates the cost of the clearance.

How Fulfillment by Amazon Works

Amazon is one of the biggest marketplaces in the world, surpassed only by Alibaba. The key to their logistics is efficient interactions with thousands of sellers who use the service called Fulfillment by Amazon (FBA) to have their stock featured on the website.

Every store owner can register a seller account on Amazon's website. Then, they have to create listings for all of their products, choosing to use manufacturer's or Amazon's proprietary barcodes to track the inventory. After all the products are listed, the seller can arrange the shipment method and see the estimated fees.

To ship the inventory to Amazon, the seller needs to create a shipping plan that includes a list of products, quantity, and shipping method. All the subsequent steps are handled by Amazon free of charge. It's worth noting that the seller has to prepare the products for shipping, using special wrapping, packaging, and extra labels in accordance with the company's rules. Next, Amazon takes the inventory and processes it at its fulfillment centers. On completion, all the items become available on the main website.

Amazon charges sellers $39.99 plus selling fees for this premium service that includes several free services: shipping to an Amazon fulfillment center, storage, removals, and return processing with the FBA New Selection program.

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Shipping as Fast as Amazon

Amazon was already popular, but the addition of Prime subscription that provides free same-day delivery for all orders over $35 that ship to eligible destinations helped the company skyrocket to the top position in the market. So, how does Amazon have such fast shipping? They pull it off with multiple warehouses for distribution, shipping with carriers that are optimal for each order, and implementing complex automated solutions to speed up the process in fulfillment centers.

With over 180 fulfillment centers across the US alone, the multi-origin network is the secret sauce behind Amazon's fast shipping. It is not a question of how many Amazon fulfillment centers there are, but rather where they are located. As we explained before, it is a matter of eliminating high-rate deliveries by having warehouses closer to the customer. Three strategically-placed fulfillment centers would cut up to 70% off the shipping cost, whereas the 180 Amazon centers allow the company to offer the kind of service unattainable by smaller businesses.

It is also essential to understand how an Amazon fulfillment center works. It is not a typical warehouse with stacks of categorized goods and handcarts. Everything is handled by a small army of robots that move giant towers of packages, with labels being applied automatically by custom-made low-powered air guns.
Combined with the size of an average Amazon warehouse, which can take up an area equivalent to 28 football fields, this technology allows for an average of 225 packages to be delivered every second, with a yearly total of around 3.5 billion.

Multi-Warehouse Support from Calcurates

If you want to take full advantage of the multiple warehouses and have flawless order fulfillment, the shipping software has to be up to the task. While, for the default version of Magento 2, multi-warehouse management is not available, using the Calcurates shipping extension allows you to create a joint system that contains every delivery origin and fulfillment center you have. Every time there is a multi-item order, Calcurates automatically optimizes the number of warehouses used and brings it down to the minimum, cutting the final cost of delivery. Try Calcurates now for free.
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