Prime Now

SKIP THE TRIP.

ONE HOUR DILIVERY.

(An Analysis of amazons evolving delivery process)

Professor: CARMEN GOYTRE CASTRO

Date: 5TH NOVEMBER 2015
Name: SHAKTI SHIKHAR

SHAKTI SHIKHAR| MIM IB-F1

The Amazon Prime and Prime Now

In 2005, Amazon introduced Amazon Prime, a membership offering its customers free twoday shipping to its customers, and a discounted one-day shipping rates. Starting with USA
amazon expanded to Germany, Japan, United Kingdom, France, Italy and Canada in the
following years. Members In USA also got free videos and TV Shows through Amazon
Instant videos without paying extra fees. The annual subscription of the Amazon Prime
service

is

$99.

In December 2014, Amazon announced that as an additional benefit to Amazon Prime

members, in parts of Manhattan, in New York City, people could get products delivered to
themselves within one hour for just $7.99, or within two hours for no additional fee apart
from their Prime membership. This new service is called amazon prime now and is only
available for existing prime members. Over 30,000 daily essential products are available
with this delivery service and whereas over 2,000,000 products through amazon Prime. In
February this year the service was extended to all of Manhattan. It has since been expanded
to various cities in USA, London and Birmingham in the UK.

Traditional Amazon delivery system

In the traditional e-commerce delivery system the customer places the order and then chooses
the delivery choices for each products from the respective sellers. Since the order placed
might have different product sellers apart from amazon each products might be shipped
individually and reaches the customer at different dates. However, the e-commerce websites
like amazon and e-bay do provide a faster shipping for an extra charge but even the faster
shippings were made within 3-5 days to reach the customers as compared to the normal
delivery system which has no time guarantee but an estimate date of arrival.
The following steps describe the process once the company receives the order and the
payment is processed.

Step-1- Order downloaded in OMS: After the customers on the amazon web store place the
order it is then downloaded into the order management system (OMS). This system is a backend ERP system that receives all the orders from across the country and processes these
orders.

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Step-2-Inventory Allocation: As soon as the order flows into an OMS, the inventory from
the Warehouses nearest to the customers, at the same time a new number of SKUs remaining
is updated on the web store after deducting the current order. This scenario is only true when
the goods are available and has to be shipped from the warehouse directly but there are other
possibilities like:
1. Back to back order fulfillment: In this case the system downloads the orders and ask its
operator to go to the vendor immediately and get the required SKUs to the fulfillment
center/Warehouse

to

complete

the

order.

2. Drop shipment: In this case the orders are downloaded and handed over to the vendor
directly and its the job of the vendor now to fulfill the orders and ship it to the customers.
The warehouse doesn't have any control over this shipment and may result in quality or
product differentiation as the customers may not get exactly what they asked for which might
affect

the

Amazon

brand.

3. Made to order: In this case, once the customer places an order a purchase order is
generated and the SKUs are purchased from the vendors and bought to the warehouse and
then the normal cycle of order fulfillment is carried on.
Amazon usually does the stocking model (keeping SKUs at the warehouse) and Drop
Shipment model for which it is widely popular.
Step-3-Order Collection: The operations team then starts processing the order in the
warehouse or requests any third party seller to do the same. Now, a pick list is generated by
the system against that order usually in the case of multiple orders at one go and using and is
handed over to a collector in the warehouse who then picks the respective SKUs from one
particular warehouse and brings it back to the picking stations, a stage location in the
warehouse.
Step-4-Order Packaging and label generation: After the collection of the order is done, the
next stage in the process is packaging. At this time of packing required documents are printed
that needs to be sent along with the shipment package to the customers such as bills, warranty
or any other required document. A unique shipping label with bar code and tracking id is
generated to identify each order, which helps customers and the company to track the order
for the ETA and the whereabouts of the package.
Step-5-Order shipment: After the order is packed and ready to be shipped out to the
customer, the order is assigned to the courier companies that handles the outbound logistics

SHAKTI SHIKHAR| MIM IB-F1

of the company like DHL, UPS, FedEx etc., as per their shipping location and a manifest is
generated for them. Then the shipment is handed over to the employee of the courier
company who comes to the warehouse to collect the shipment. Once the shipment is out of
the main warehouse it is sent to the sort facility where the packages are sorted according to
their destination and the time of delivery.
Step-6-Order Received at Destination: Once the order reaches is destination the courier
company sends it to its own facility at the destination and the packages are sorted according
to the time and area of delivery. The company (Amazon) then informs the customer about a
time window in which the delivery can be expected.
Step-7-Shipment Delivery: The shipment is then delivered to the respected customer and the
courier company updates the details of the delivery back to Amazon regarding the
consignment at which points Amazon informs the customer about the completed transaction
and asks for feedback. Sometimes it is also possible that after several attempts to deliver the
product and due to the unavailability of the customer the goods are shipped back to Amazon.

The Amazon Prime Now

The Amazon Prime now is amazons promise to the world that they can get what they want
within minutes of placing the order. Amazon started its prime now service, which is a
membership only service for its Prime Now members. With this service Amazon promises to
deliver the order within two hours of the purchase with no additional cost to the membership
or a fee of 7.99 $ for a one hour delivery. Who would have thought that we could get
everything we need delivered to our doorstep within an hour of purchase. Well, Prime now
most certainly is fulfilling its promise. Amazon started the Prime Now service from the city
of New York in December 2014. A service, which is fairly new in the industry, is growing
exponentially and has increased the number of its Prime Members as well as the Amazon
customer base in the following months. However, currently there are over 30,000 products
on the Prime Now store to order and the service is currently available in New York City,
Miami, Baltimore, Dallas, Atlanta, Austin, Chicago, and Indianapolis.
The following steps describe how Amazon Prime Now is different to the traditional ecommerce delivery system and how it works after the customer places the order.

SHAKTI SHIKHAR| MIM IB-F1

Step-1- Order downloaded in OMS: After the customers places an order on the Amazon
Prime now App available on Android and the App store the order is then downloaded into the
order management system (OMS). This system is a back-end ERP system that receives all the
orders to the closest warehouse to processes these orders.
Step-2- Order Confirmation: As soon as customers place the order they receive a text
message confirming the order, time of delivery, tracking id which enables them ti track the
order through the app.
Step-3-Inventory Allocation: As soon as the order flows into an OMS, the inventory from
the Warehouses nearest to the customers, at the same time a new number of SKUs remaining
is updated on the app store after deducting the current order. In case of Prime now customers
can order shipments from amazon as well as third party sellers anywhere within the delivery
area that the service covers.
Step-3-Order Collection: The amazon fulfillment team now collects the SKUs from the
amazon fulfillment centers and brings it to the packaging station in the warehouse.
Step-4-Order Packaging and label generation: After the collection of the order is done, the
next stage in the process is packaging now in c this case the company also saves 5time, as
there is little or no packaging until the product is highly fragile or a food product. At this time
of packing required documents are printed that needs to be sent along with the shipment
package to the customers such as bills, warranty or any other required document. Since the
orders are delivered within the city all items in a particular order are packed and tagged with
one common label used for tracking the order by the customers.
Step-5-Order Delivery: Since the order has to be delivered within the city and in less than
an hour or two, a dedicated team at the amazon fulfillment centers is responsible to carry out
each individual delivery at the doorsteps and requests the third party seller to do the same,
just like we have been ordering pizza so far.

Conclusion

At 12:15 p.m., as I put my order together, I could have gotten the delivery for free
between 2 and 4 p.m. In the name of journalism, I splurged on the $7.99 to get it within an
hour, and the service was pretty impressive. It was raining outside and I still got the bag at

SHAKTI SHIKHAR| MIM IB-F1

1:19 p.m., five minutes before the 1:24 p.m. deadline.1 This is what Lily Hay a publicist at
slate has to say about the Amazon Prime now. It is evident that Amazon has left no stone
unturned to make lives for its customer easier and the future of e commerce better. The
new alternate delivery process of Prime has helped the company get over 1o million
customers and has solved various problems. This process innovation has helped the
buyers to stay home and order whatever they want from electronics and clothing to
immediately required items like grocery and medicines, such innovation can create only
loyal and happy customers. To solve the problem that courier companies took time to
reach the customers, Amazon has established its own fulfillment team to process timely
and quick deliveries and is also working on drone technology also known as Prime Air.
The third problem that amazon Prime now has solved is that people can get whatever
they want even if its not available with Amazon with this amazon no longer needs to
maintain large warehouses and millions of SKUs within the company and can collect
and deliver goods from partner third party companies. To conclude, the Amazon prime
now service is almost near perfect and improvements can only be made to assure
quality products (Exhibit 3) from third parties for this amazon needs to come up with a
plan through which they can keep an eye on third party associates and customers dont
have to be unhappy and return the products claiming they did not get what they exactly
asked for creating a situation in which both customers and Amazon stand to loose.

1
http://www.slate.com/blogs/moneybox/2014/12/23/amazon_prime_now_same_day_
delivery_works_in_central_manhattan.html

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Exhibit 1: E-commerce (Amazon) delivery process

|


Main possible failure:

F1: The Company rejects the
order
F2: The courier boy does not
contacts the customer for
timely delivery
F3: Shipping company waits for
bulk orders for one area i.e.,
takes time.
F4: the suppliers do not supply
required inventory.

Response to Sensory Element:

Legend:

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Exhibit 2: Amazon Prime Now delivery process

|


Main possible failure:

F1: The Company rejects the
order
F2: The courier boy does not
contacts the customer for
timely delivery

Response to Sensory Element:

Legend:

SHAKTI SHIKHAR| MIM IB-F1

Exhibit 3: Amazon Prime Now delivery process (Recommendation)

|


Main possible failure:

F1: The Company rejects the
order

Response to Sensory Element:

Legend:

SHAKTI SHIKHAR| MIM IB-F1

Exhibit 4: Amazon fulfillment center

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Exhibit 5: Infographic Amazon Prime

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Exhibit 6: Order fulfillment Process

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Bibliography

(Kumar, 2014) https://www.quora.com/How-does-Amazon-Prime-Now-onehour-delivery-work

(newman, 2013)
http://www.slate.com/blogs/moneybox/2014/12/23/amazon_prime_now_same
_day_delivery_works_in_central_manhattan.html

(Amazon, 2015)
http://www.amazon.com/b/ref=pn_surl_lp/?node=10481056011

(Honorof, 2015) http://www.tomsguide.com/us/what-is-amazon-prime,news18041.html

(Wikipedia, 2015)https://en.wikipedia.org/wiki/Amazon.com

(Nikunj, 2014) https://www.quora.com/What-is-the-work-flow-at-Flipkartafter-the-order-is-placed-online

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