Information Technology And Innovation Foundation, a non-profit think tank focused on promoting policies that advance innovation, technology, and economic growth said that companies such as Amazon and Walmart have created faster and faster methods of delivering products. In the wake of these developments policymakers are creating regulations that stifle innovation and limit product availability.
This development within the logistics industry is impacting both businesses and consumers significantly.
The delivery times in e-commerce have been dramatically reduced over the years. According to an article from ITIF, the landscape of fulfillment and e-commerce underwent a transformative shift with the introduction of Amazon Prime and two-day shipping in 2005. Amazon further revolutionized delivery by introducing one-day and same-day options, prompting Walmart to adopt a similar standard with the rollout of one-day delivery in May 2019. These strategic measures to streamline delivery timelines yielded remarkable results. In the initial half of 2023, Amazon achieved an unprecedented feat, delivering 1.8 billion items on the same day or next day— a staggering fourfold increase from the corresponding period in 2019. Notably, Amazon's average delivery time plummeted from 3.4 days in June 2021 to an impressive 1.5 days on average in June 2023. Concurrently, other digital retailers experienced a notable reduction in their average delivery times, dropping from 7.4 days in June 2022 to 5.2 days in June 2023. The significance of timely deliveries is underscored by consumer behavior, with individuals being 73 percent more inclined to make repeat purchases from retailers ensuring swift product delivery. Recognizing the pivotal role of delivery networks in shaping consumer experiences, retailers are keen on retaining control over these networks to guarantee a positive overall customer journey.
Yet potential regulatory changes threaten this fast-paced delivery landscape. According to an article from ITIF, potential regulatory or legal actions may disrupt the speed of consumer deliveries, particularly concerning Amazon's offering of free, two-day shipping to Amazon Prime members for Prime-eligible items, a practice under scrutiny by the Federal Trade Commission (FTC). The FTC has accused Amazon of potentially coercing third-party sellers into using its fulfillment services by restricting "Prime eligibility" to items fulfilled by Amazon. The resolution sought by regulators remains unclear, and any imposed changes on Amazon's fulfillment and delivery services could result in delayed deliveries and reduced availability of third-party products. As the current regulatory landscape allows consumers to enjoy more affordable, swift delivery and a broader product selection, policymakers must carefully weigh these benefits against potential regulatory or legal measures that could hinder logistics innovation or limit product accessibility. Policymakers, in crafting new laws and regulations affecting the vital rapid logistics networks for consumers, must prioritize the long-term interests of consumers and the sustained growth of the e-commerce sector.
As part of their efforts to enhance service efficiency, some companies have started utilizing advanced technologies like Artificial Intelligence. According to an article from CBSNews, Amazon is using AI to help speed up deliveries for the holidays. Amazon is claiming their deliveries are faster than ever due to the institution of AI to help deliveries. According to Scot Hamilton, Amazon's vice president of Planning and Routing Technology, about Thanksgiving weekend, "it's like our Super Bowl; we practice for it months in advance. I kind of like to think about AI as like oxygen - you don't feel it; you don't see it. It's what makes the magic happen." This facilitates expedited delivery, with delivery stations increasing their daily package handling capacity from 60,000 to over 110,000 during the holiday season.