Supply Chain News - The Logistics War Enters A New Phase

Supply Chain News - The Logistics War Enters A New Phase

Amazon is increasing its logistics operations in the Australian and Asian market in addition to strengthening its operations in the USA.

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Original article: Forbes

Amazon is no longer hiding its plans to integrate vertically and become its own logistics company: it already sends almost half of its shipments in the United States, 47.6%, itself, with USPS making up a declining 33.3% (Donald Trump has told it to start charging Amazon more), and FedEx and UPS already reduced to 16.5% and 1.6% respectively.

The all-too-clear intentions of the e-commerce giant are already worrying FedEx, which until recently was playing down Amazon’s logistics potential, but has now said it will not renew its logistics contracts with the company. Perhaps in response, Amazon is announcing an increase of the operations of its aircraft fleet, Amazon Air, into the strategic Asian market. In addition, it has signed an agreement with Rite Aid, which will apply to other large chain stores, to deliver packages in their outlets for collection, hopefully boosting customer flow in them, while at the same time pressing ahead with the creation of small last-mile delivery companies as well as the use of subcontractors through Amazon Flex.

Logistics is a $1.5 trillion market. For the moment, Amazon seems interested only in its own e-commerce activity, but following its usual strategy and having obtained the appropriate economies of scale and expertise, it may seek to increase its turnover by offering logistics as a service to its own suppliers or other companies. Even taking into account that logistics is not only the business of distributing the stuff we buy online, but is also a huge business moving all kinds of goods around the world, this is no small threat: Amazon already makes up 49% of online shopping in the United States, which represents no less than 5% of all retail sales.

At the same time, logistics will be made yet more efficient thanks to machine learning, a field in which Amazon clearly outstrips its competitors. It is also the cause of the vast majority of customer complaints.

In short, a company that until now has kept logistics companies in business has decided to go for vertical integration. Furthermore, in the medium term, it will start offering logistics services of its own.


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