Amazon Has a Fulfillment Cost Issue It Needs to Resolve

After 24 years in business, Amazon is an amazing growth story for a mature company, with sales up 31% to $232.9 billion in 2018, defying the “law of large numbers.”

The only growth more awesome than that is the company’s cost to fulfill sales, which rose by 35% last year, to $34 billion, and which rose to a larger overall proportion of the company’s operating expenses, equivalent to 14.6% of total sales, up from 14.2% in 2017, according to the company’s 10-K filing.

In fact, the gap in growth between sales and fulfillment is likely to widen in coming years, which may mean Amazon either finds a way to generate much more sales from that fulfillment empire, or it finds a way to streamline the empire, perhaps by at some point divesting the actual physical assets in favor of an asset-lite model whereby its Amazon Web Services acts as a facilitator of the logistics of moving goods. Read more here:

 

Amazon Fulfillment Costs are Rising