The Briefing
- Amazon’s shipping and fulfillment costs have soared to over $150 billion
- Global supply chain constraints have accelerated these costs, which are now 40x their 2009 levels
Visualizing Amazon’s Rising Shipping Costs
Most investors would agree that Amazon has been a winner during the COVID-19 pandemic. After all, in two short years from 2019 to 2021, sales soared to $469 billion from $280 billion and their market cap surged towards a $1.7 trillion valuation.
But even the best of companies have had to navigate choppy waters and uncertainty during this time. For Amazon, this has come in the form of cost pressures in their shipping and fulfillment department, which are now representing an increasingly large share of revenues.
Just how large are Amazon’s shipping and fulfillment costs becoming?
In 2021, shipping and fulfillment costs added up to $151.8 billion. Shipping, which includes sortation, delivery centers, and transportation costs amounted to $76.7 billion. Fulfillment costs, which include cost of operating and staff fulfillment centers, were $75.1 billion.
As a result of these trends, Amazon’s shipping and fulfillment expenses now represent 32% of their revenues:
Year | Cost as a % of revenue |
---|---|
2021 | 32% |
2020 | 31% |
2019 | 28% |
2018 | 27% |
2017 | 26% |
2016 | 25% |
2015 | 23% |
2014 | 22% |
2013 | 20% |
2012 | 19% |
2011 | 18% |
As you can see, costs are escalating, and today’s figure is almost twice that of the 18% figure seen in 2011.
Amazon Web Services to the Rescue
While these expenses are rising, it’s important to remember (Read more...)