Amazon Retail: Variable Costs per Unit Efficiencies

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Yes, please walk me through that. We want to deconstruct the system overall, so however you can explain it to us would be very helpful.

What they're doing is assessing where the inventory is located and how close it is to you. If you're purchasing multiple items, they may try to determine if they're in the same warehouse. Sometimes you'll see one item will arrive on Tuesday and another on Wednesday. Essentially, they're examining the inventory to ensure there aren't any other orders lined up against it, or if there are, that there's enough inventory to cover them all.

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Yes, please walk me through that. We want to deconstruct the system overall, so however you can explain it to us would be very helpful.

The process works backwards. It determines if you order within the next 10 hours, they can have it to you by Tuesday. This means they need to schedule a pick of that item accordingly. Depending on the time between now and the promised delivery, they'll choose the cheapest shipment method possible to meet the promise date. If you're a Prime customer, most items will arrive in two days or less, so that box might already be checked depending on the promise and when you're ordering.

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Which parts of the warehouse and fulfillment centers do you think could see improvement?

Picking is a really challenging problem, especially when it involves selecting items from a densely packed tote. At Amazon, the multi-order process involves inventory being brought to pickers, who then select individual items and place them into the same tote. These items are for different orders, not just one. The ability to accurately pick the right item from a bin is extremely difficult with robotics and computer vision due to the various ways items can be jumbled in the tote.

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