Amazon’s obsession with innovative logistics dates back to 1994 when Jeff Bezos began building his empire from a humble garage in suburban Washington.
Today Philippe Hémard, Vice President for Amazon Logistics Europe reminded an international audience of e-commerce and supply chain executives that this drive for operational excellence in fulfilment and delivery is still the rocket fuel propelling the web giant forward.
Speaking at day two of the Deliver One conference in Luxembourg, Hémard talked through the rapid progress in fulfilment and delivery that has been made in the 20 years of Amazon, saying that his arrival at the company in 2007 coincided with a realisation that the last mile was everything. Since then we’ve seen a steady flow of delivery acceleration with the launches of next day delivery, same day delivery, Amazon Prime cost savings, Amazon Fresh, Amazon Prime Now, Amazon Lockers, Amazon Flex and, most recently, Amazon Prime Air – using ‘small unmanned aerial vehicles’ – drones – to deliver packages to customers in 30 minutes.
Joined on stage by founder and organiser of Deliver One, Stéphane Tomczak, Hémard was questioned about where the impetus for such innovative operational strategy originates from. Hémard said that Jeff Bezos has inspired a company-wide fascination with the power of technology to improve delivery to the customer. “Fast and low cost delivery to the customer is our obsession, and we want to keep going faster and faster and faster” he said. “We want to be the most customer centric company and this is why every saving we make with fulfilment efficiency we pass on to the customer in the form of better, quicker, cheaper services.” He said that new initiatives such as Amazon Prime free same day delivery which was introduced in 2015 helps drive traffic to the site and builds customer loyalty “because customers love our constant speed improvements and price reductions”.
A big achievement for the company was delivering a package to a customer in Milan in 3 hours and 53 minutes, in 2014, “although admittedly he did live close to the fulfilment centre,” Hémard joked. When high profile fulfilment problems have arisen, for instance when Christmas fulfilment failed to meet customer expectations, Amazon has made a point of retaining customer loyalty “whatever the cost” by giving full refunds to make amends, backed up with direct communication and apologies to customers.
Drones are a long term solution says Amazon
Hémard was clear that putting Prime Air into general service will take several years but that it will be deployed “when we have the regulatory support in place to realise that vision”. Testing is currently taking place in the UK with the close involvement of the Civil Aviation Authority he said. An interesting point of view from Hémard was that traffic congestion will make truck deliveries in cities increasingly difficult in the coming years, hence the long term plan to invest in aerial vehicles. His assurance to the couriers of the world was that there would be plenty of business to come until then.
“We are going to invest more and more in this part of logistics, and the only purpose to this and everything we do is to speed up and keep the costs low. We want to go faster, that’s who we are.”
Hémard said investment in technology to drive these innovations has been at the core of the business, but that one question habitually underpins the investment plan – “what can we do that the customer will really love?”.
The charismatic Frenchman drew a veil over future plans saying: “What will be next is confidential, but we’re happy to talk about why we do what we’re doing now.” Continued fast growth is a given though, with Hémard nonchalantly stating: “We are actually only in 11 countries with dedicated websites, so really it’s day one.”
- 300m active customer accounts
- 250,000 employees or ‘Amazonians
- 11 country websites
- 125 fulfilment centres worldwide
- 49% of sales are by 3rd party sellers
- Alison Clements at Deliver One conference