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The Impact of Amazon Prime on Apparel Logistics

Most people have heard of Amazon Prime, the e-tailer giant's subscription plan that offers freebies like two-day shipping and streaming services. Since its debut in 2005, Amazon Prime has grown to about 40 million participants, and research shows that Prime members spend more than double the amount that non-Prime members spend on the website. Clearly, the Prime program has proved successful for Amazon, but what impact does it have on global trade and logistics?

Free Shipping: An Irresistible Incentive


The original idea behind Amazon Prime proved extremely simple: Not only could customers get free shipping, but they also got their packages within two business days. Before Prime, Amazon offered free regular shipping on orders over $25, but the added time benefit sealed the deal for many online shoppers.

As more and more people joined Amazon Prime, the demand on the worldwide logistics industry increased tremendously. People could order as many things as they wanted from Amazon — often of varying sizes and weights — without any penalty to their pockets in terms of shipping. Consequently, traditional couriers like UPS and FedEx began to feel the strain, particularly around the holidays.

3PL: Entering the Logistics Industry

While Amazon founder Jeff Bezos promises that his company isn't "trying to kill UPS," he admits that Amazon has entered the third-party logistics, or 3PL, industry to help meet consumer demand for shipping. The company now has trucks that deliver packages all over the world, but particularly in the U.K.

This new development demonstrates the need for 3PL partners across all industries, from fashion and apparel to electronics and home goods. As consumers order more products online, the logistics industry becomes uncomfortably saturated, and the supply chain can get clogged.

This is particularly true when it comes to distribution. Couriers can only handle a certain number of packages each day without investing in more trucks, drivers, and other infrastructure. A 3PL partner can speed up the process, meet consumer demand, and reduce the workload on other distribution companies.

The Future: Amazon Prime Is Here to Stay

Clearly, Amazon has experienced unprecedented success with Prime, and other companies might follow in its footsteps with similar goods-as-a-service models. A subscription plan guarantees the retailer a certain amount of money each month, regardless of whether or not the customer buys a product. If Amazon continues to grow and other companies follow suit, the logistics industry will continue to suffer under the strain.

However, 3PL providers can step in and help with all aspects of supply chain management. This type of partnership could prove particularly beneficial for apparel startups and smaller companies that don't have their own manufacturing and distribution centers. While Amazon continues to dominate internet retail sales, it shouldn't stop smaller companies from competing in the marketplace.

Prime should prove sustainable into the far future. It's certainly improving Amazon's position in the e-tailer market, and the company continues to add new benefits for customers every year.

Examining successful models like Amazon Prime can help other business owners create their own success. If you're looking for an experienced apparel 3PL provider, request a free consultation with The Apparel Logistics Group (TALG) so we can help you meet your customers' demands.

Posted: 10/6/2016 2:49:56 PM by Global Administrator | with 0 comments


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