Welcome to Brainstuff, a production of iHeartRadio, Hey Brainstuff, Lauren volgeban here. These days, whether you're ordering a book, a smartwatch, a tablet piece eve, or a pair of slide sandals, the chances are you're anticipating finding that item in a box on your doorstep tomorrow, and you're not alone. A twenty twenty one study of twelve thousand consumers in the United States and other countries found that sixty percent of consumers expect two day, next day, or same day delivery
of products. We've gotten spoiled largely because of the relentless efficiency of Amazon and other major online retailers. But how do online retailers actually make those products magically appear on our doorsteps? For the article this episode is based on how Stuff Work. Spoke with Tinglong Daie. He's a professor at Johns Hopkins University's Carry Business School and an expert in operations management, a discipline devoted to making businesses more efficient.
He explained that it's a combination of advances in logistics, in the science of planning transportation to achieve maximum efficiency and reliability, and in the near art of predicting consumers purchases in advance. Researchers and experts at universities have been working with major companies for years, helping them to speed up their supply chains and shorten their delivery times. Dya said, it's not that difficult to deliver products quickly per se.
The target is always to deliver stuff quickly, but also in a low cost manner. You can always send something from point A to point B quickly, but it just might be very expensive. Basically, you have to figure out a trade off among responsiveness, cost and quality. That means shipping products as cheaply as possible, but while also ensuring that there's a variety of stuff for consumers to pick from so that they can customize their order. Day explained.
The reason Amazon has dominated the American retail sector is probably the fulfillment center idea. Centrally managed fulfillment centers allow Amazon to centralize its supply chain and respond to the market quickly. It works so effectively that other retailers all over the world have imitated Amazon centers. Here's how they apparently work. Whenever a customer purchases an item online, a complex process kicks into gear. First, the order is transmitted
to one of the company's fulfillment centers. These are basically massive warehouses where employees pick and pack the products into boxes. Those packages are loaded onto large trailer trucks and transported to an Amazon Air site, where they're loaded onto aircraft. Once the planes land at their destination, the packages are transferred to a facility called a sort center, where they're
organized by ZIP code. They're then loaded onto trucks to be taken to yet another facility called a delivery station. From there, goods are loaded into delivery vehicles for their
ride to your doorstep. Amazon doesn't disclose the number of fulfillment centers it has on its website, and the company didn't respond to House Toaffork's email request for information, but cell Go dot com and on affiliated website that provides tools and data to Amazon sellers estimated in twenty twenty one that the e commerce giant had one hundred and eighty five filment centers around the world, including more than one hundred in the United States. A centralization is the
key here. A traditional big box retailer like Walmart might have hundreds of stores and a warehouse for every two or three stores. Amazon began with just one single fulfillment center in the Seattle area to maintain its supply of merchandise, and then gradually expanded as their business expanded. Today, each fulfillment center meets the needs of a region encompassing a
whole state or maybe two. Having these big, centralized warehouses is a huge advantage because it enables Amazon to stock enough products to meet the needs of a variety of different customers quickly. Compared to a business like Walmart that relies on physical stores, Amazon is thus better able to
deal with uncertainty and fluctuations in demand. Dye used books as an example, at any given moment, there might be two or three people interested in buying a physical copy of, say the novel Jurassic Park, or I don't know, a Warren piece. An online retailer can make sure it keeps three to four copies of each book in stock to meet that demand, but a physical retailer can't do that. A customer who goes into a store looking for whatever
book may not be able to buy it. A guy said, nobody is going to buy something that isn't on the shelf.
An e commerce consumer doesn't have to wait for their local shop to order a copy of the book they want, or to settle for whatever's in stock, because an e commerce retailer can maintain a larger supply of products and ship them right away, and retailers as big as Amazon have learned the trade offs between centralization and proximity and have built more fulfillment centers closer to their customers to reduce shipping times. Okay, but how does an e commerce
retailer know what to stock in each fulfillment center. That's the realm of demand forecasting. A company's employ scores of data scientists to do such forecasting, not just across the US, but in different states and metropolitan areas. Their research involves poring over demographic data and housing income and using artificial
intelligence and machine learning to make their predictions. Plus they've designed inventory systems that replenish supplies automatically whenever stock gets low to whatever value of low is assigned to a particular product. Another trick to speed things up is positioning products in the warehouse according to demand rather than category. Amazon warehouses, for example, don't have toy sections, or food sections,
or even book sections. The most frequently ordered stuff is the most accessible, and everything can be located with a quick barcode scan, enabling warehouse workers to find products in a hurry and get them onto those trucks. E Commerce retailers also use another technique called crosstocking, originally pioneered by Walmart, for getting goods out of big trucks and directly into smaller vans for delivery. Dye said. The idea of cross stocking is to reduce the need for warehousing as much
as possible. Basically, you have outgoing trucks that pick up from incoming trucks without having to deal with shelving and sorting and warehousing operations. They try to coordinate the timing so that when trucks arrive to deliver the goods, you have other trucks ready to pick it up. Next day delivery works pretty well these days, but with consumers growing accustomed to it, online retailers increasingly are offering same day
delivery for some items. A twenty twenty one forecast by Research in Markets dot Com predicted that the same day delivery market would grow at a compound rate of more than twenty percent between twenty twenty one and twenty twenty five. Also in twenty twenty one, a leaked internal Amazon memo suggested that the company could run out of warehouse workers
by twenty twenty four. Amazon has been accused of churning through warehouse workers and emphasizing their productivity above everything else, including employee safety and comfort, but workers are fighting back. The Staten Island, New York warehouse called JFK eight, was Amazon's first in the US to successfully vote to form a union in April of twenty twenty two, and other warehouses are pushing to unionize as well. Today's episode is based on the article how does Amazon deliver stuff so Fast?
On how Stuffworks dot Com written by Patrick D. Kiger. Brainstuff is production of iHeartRadio in partnership with how Stuffworks dot Com and is produced by Tyler Klang. Four more podcasts my heart Radio, visit the iHeartRadio app, Apple Podcasts, or wherever you listen to your favorite shows.