Amazon Case Study

ASSIGNMENT
RNB GLOBAL UNIVERSITY

Lavesh Sethia
MBA 2nd semester
What is Amazon Logistics?

Amazon is indeed one of the largest selling and buying platforms in the e
Commerce industry. As consumers are heavily relying on online shopping due
to the spread of Coronavirus, Business Insider estimates Amazon’s global e
Commerce sales to reach $416.48 billion by the end of 2020.
Amazon is a one-stop shopping solution for many people. They quickly get all
products they need, be it household or personal care. Now, when an order is
placed with Amazon, traditionally, the order is sent out with a third-party
courier, like FedEx. But now with Amazon Logistics, Amazon uses its
contracted-out people and their fleet of vehicles to deliver the products for the
sake of better and faster delivery options.
In a nutshell, Amazon Logistics is a shipping and delivery service that
complements the existing shipping service providers. Amazon utilizes third-
party logistics partners to make this happen – including motorcyclists,
bicyclists, and even walkers in some areas.
Amazon has certain conditions for third-party providers, related to licensing,
vehicle, insurance, and safety training. It is worth mentioning that these
contractual people are not Amazon employees. These people are logistics
providers and pick deliveries from Amazon warehouses. The delivery people
use Amazon tech to deliver products and enjoy flexible schedules as well.
Amazon Logistics benefits shoppers directly. It is a win-win situation for them
as they get their products faster (often same-day) and cheaper as they don’t have
to pay high delivery charges for quicker deliveries.
To improve its delivery logistics, Amazon “Global Stores” engaged the services
of Indian Post, a government-operated postal system, and logistics companies
such as Blue Dart, Aramex India, and DHL Express to deliver products to its
customers. It also utilized the services of bicycle and motorcycle couriers to
reach its rural and sometimes even its urban customers. Around 27 fulfilment
centres were set up across ten different states in the country in direct contrast to
a centralized fulfilment centre in US. Order tracking, Which plays a crucial role
in winning over the trust of customer, is taken care of by these fulfilment
centres. Sellers drop their products to these fulfilment centres at a fee before any
order is placed.
Amazon provides studio facility to the suppliers for taking photographs of their
wares for online posting. These goods are checked for quality, stored, packed,
and shipped the customers from these centres when the orders are received.
Generally, Amazon holds back a part of the sales for about seven days as a
buffer against possible returns. The accounts with seller’s agreement with the
company. Decisions with respect to returned goods lie solely with the company.
More than 100 delivery stations and about 15 sorting centres have been also
opened up by the company.
Flipkart-Myntra Partnership Steps Up With Logistics Sharing
It’s time for taking the partnership a step ahead! Flipkart and its year old partner
Myntra would now be sharing logistics and warehousing. Work is already in
progress to consolidate both the supply chains.
With a rapid increase of brands boarding the ecom bus with etailers like Myntra
and Flipkart, need for effective logistics is the key to cater to a highly diverse
consumer market. Both the companies will now consolidate parts of their supply
chain and create a common facility to be utilized by both.
The supply chain is one of the costliest functions in e-commerce firms after
marketing. The decision to share logistics will benefit both companies by cost
reduction in shipping, timely deliveries to consumers and by implementing flexible
models of logistics. This will further lead to better business credibility and higher
consumer satisfaction.
A recent report by retail advisory Technopak says that typical online retailers
spend 6 to 8 percent of their gross merchandise value on logistics, to improve
customer satisfaction. However the Indian e-commerce players have been spending
7 to 15 percent of its sales on logistics.
Myntra is currently outsourcing its deliveries to third-party logistics firms on a

demographical basis. Flipkart has already tied up with various trade associations to
facilitate the delivery program.
Another key advantage is the absorption of delivery charge within the selling price
for larger goods like ACs, refrigerators, etc. Gradually, this will be extended to
other commodities as well, like garments and footwear. This will help reduce the
cost of products for the consumers and increase their purchasing power. Both the
companies are constantly trying to explore new ways of enhancing customer
experience and be able to cater to more and more customers across the country.
Q2. SELLERS’ DISPLEASURE WITH AMAZON

Some reports have emerged with respect to sellers’ displeasure with Amazon
concerning its policy on return products, payments to them, and closure of their
accounts. Sellers feel that the company maintains very tight control over the
commitments it expects from them—starting from the number of products they
are expected to hold, time of delivery, time of receiving payment, and also the
amount of withholding of their cash. When any issue of dispute arises between
consumers and sellers, Amazon is strongly biased towards the former. In case of
product return through its courier service, the company is likely to deduct
anything between 50–100 % of the total amount. It imposes a fine on the sellers
when a dispute arises between consumers and them on the products delivered
through external courier services without seeking their opinions. Sellers have to
struggle to get their money refunded. Blocking of their accounts is another
problem that some of them are facing. It may take several days before the
account becomes functional. This poses cash problems for the sellers.
Interestingly, Amazon had already faced similar accusations of high-handedness
in the form of lawsuits in US.
The company, on its part, has denied accusations levied by some of the Indian
sellers, and expressed that returns have been classified into four different classes
under its transparent policy: damage of product by Amazon, consumer’s
decision not to buy, wrong product, and mismatch between actual product and
its description on site. In case of damage caused by Amazon, the company takes
the responsibility to fully compensate the seller. But, in case the sellers commit
mistakes repeatedly and underperforms, then the company is compelled to take
action against them and block their accounts. It gives seven days’ time to its
sellers to resolve issues when complaints arise in their use of external logistics.
Contrary to the statements made by sellers, the company claims that it charges
penalties only after seeking their permission. Amazon asserts that it has always
helped the sellers increase their monthly sales. It is quite likely that some of
them may find it difficult to match up to the expectations of the company,
which is known to please its customers by providing a huge range of product
choice at very low price and fast delivery.

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ASSIGNMENT

RNB GLOBAL UNIVERSITY

What is Amazon Logistics?

Flipkart-Myntra Partnership Steps Up With Logistics Sharing

Myntra is currently outsourcing its deliveries to third-party logistics firms on a

Q2. SELLERS’ DISPLEASURE WITH AMAZON

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