According to a data presentation by tradingplatforms.com, Amazon’s logistics bill has shot up by over 1,300% in the last 10 years. In 2012 the firm’s logistic bill stood at $11.607B, 19% of the net sales that year. That would balloon to $151.8B in 2021, about 32% of the firm’s net sales that year.
“The rise in logistics costs is driven by a dramatic increase in Amazon’s direct shipments,” says Edith Reads, a financial expert at tradingplatforms.com. “In 2012, Amazon had a customer base of about 180 million; today, that stands at over 300 million. Its shipments have grown in tow with that expanded customer base.”
Understanding Amazon’s growing logistics bill
That 1,300% increase is pretty huge, but it makes sense when you consider that Amazon’s business model has changed a lot during that time. The company used to be primarily an online bookstore, but now it sells everything from groceries and clothing to electronics and home goods.
All of these need to be delivered to customers’ doorsteps. And as consumers continue their move toward online purchases, it’s only natural that Amazon’s shipping costs would increase. That’s especially true since delivery options are getting faster.
Effects on Amazon, its customers, and Shareholders
The development is great for Amazon. It enables them to run more efficiently and cut down on their delivery times. But what does this mean for consumers?
While Amazon may be able to profit from this increase in spending, customers are paying the price. For instance, Amazon has hiked its monthly and annual Prime membership by $2 and $20.
It’s also a boon for Amazon investors. By Amazon investing in its logistic operations, it will be able to keep up with its massive growth in sales. That, in turn, promises more profit on their investments.
