Amazon turnaround revelation reduce logistics and payment costs



Amazon CEO Geoff Bezos;

is the world’s most famous e-commerce company Amazon is how profitable it? In five years time, the logistics cost is reduced nearly by half! At the same time to take advantage of this to reduce the logistics cost, freight, against competitors, expand sales and market share, to play a scale effect, so as to further reduce the cost of logistics. In contrast, China’s e-commerce companies, in reducing logistics costs, has not yet found a suitable model. This paper tries to give an answer.

e-commerce companies with virtual network store instead of the physical store, although the store rent savings, but increased logistics costs.

"logistics execution cost (including transportation, order processing, warehousing, delivery and return cost) has become the largest expenditure of e-commerce enterprises in addition to the cost of goods sold abroad. Dangdang, for example, in the first nine months of 2010 gross margin was 22%. The marketing costs, technology costs and general administrative expenses in total sales revenue of 9.3%, but only the "logistics execution cost" an account for 13% of sales revenue, resulting in the first three quarters of the company (and other business income) net profit rate is only 1%.

and Amazon in the last century in 90s, the "logistics execution cost" was also accounted for 20% of the total cost is decreased to about 10%, but still accounted for 8.5% of total sales revenue (Amazon, the biggest cost is the "cost of sales", due to the cost of goods sold on the basis of determining the price, so the cost of sales accounted for sales revenue the proportion has remained at around 80%. As for other costs, a smaller proportion of total sales revenue.

shows that the reduction of logistics cost is very important for e-commerce enterprises. Amazon has been able to profitability, the key factor is the reduction in logistics costs.

let’s take a look at amazon. 1999 – 2003, Amazon re integration of logistics system, the external transportation costs accounted for sales revenue, down from 13.8% to 9.7%, "order execution cost" (mainly the call center operation, order processing, warehousing, delivery and payment system cost) the proportion of sales income, down 15% from the highest to 9.1%.

also from the profit data, Amason was established in 1995 to achieve profitability in 2002, during this period, the maturity and size effect "and" down "the catalogue of transportation cost respectively accounted for 3.5 percentage points of gross profit rate, promote the gross profit margin increased by 7 percentage points; at the same time, the decline in the cost of the execution of the order" also, contributed 5 points profit rate; and significantly reduced on the goodwill and other intangible assets amortization and restructuring costs and other non operating costs, making Amason’s operating profit margin rose from -30% to 0%.

therefore, from a business point of view, >

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