The last mile

The last mile is where the delivery costs pile up.

The challenge for Amazon is that delivering goods is expensive. Make no mistake: while Bezos accepts high shipping fees as a price to be paid to keep Amazon’s flywheel spinning, shipping is also costing the company a fortune. The cost of a single delivery can range from $7 to $10. In most cases, the last-mile costs can be more than half of the total cost of the shipment.

To lower costs and improve speed, Amazon over the years has tried different approaches, including outsourcing its delivery efforts to FedEx, UPS, and even smaller, independent logistics companies that charge less than major couriers.

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