Amazon started as online book store and has grown to be the worlds largest online retailer.
We face intense competition from fulfilment and logistics companies, says Amazon
Amazon added “fulfilment and logistics” companies for the first time to a list of industries that present “intense competition” to the marketplace.
While logistics suppliers such as FedEx and UPS provide last mile services for the marketplace, the news suggests Amazon consider their increasingly advanced fulfilment solutions to put them into direct rivalry with other players in the field.
The marketplace announced their increasing logistics status in their securities and exchange commission (SEC) annual report last week.
“The worldwide marketplace in which we compete is evolving rapidly and intensely competitive, and we face a broad array of competitors from many different industry sectors around the world. Our current and potential competitors include: (1) physical, e-commerce, and omnichannel retailers, publishers, vendors, distributors, manufacturers, and producers of the products we offer and sell to consumers and businesses; (2) publishers, producers, and distributors of physical, digital, and interactive media of all types and all distribution channels; (3) web search engines, comparison shopping websites, social networks, web portals, and other online and app-based means of discovering, using, or acquiring goods and services, either directly or in collaboration with other retailers; (4) companies that provide e-commerce services, including website development, advertising, fulfillment, customer service, and payment processing; (5) companies that provide fulfillment and logistics services for themselves or for third parties, whether online or offline.”
Amazon reported shipping costs of $9bn (£6.95bn) in their consecutive fourth-quarter results. That’s up by 23% on year-on-year (YoY) from the same time last year. The figures indicate the growth of the marketplace’s free two-hour delivery service, Amazon Prime, which suggests that customers are opting for the shipping options offered by Amazon.
The marketplace are already working on strengthening their fulfilment infrastructure to step up as a logistics leader. The end of January saw them piloting a new delivery robot for Prime-eligible members in the US. Last year, Amazon was testing a shipping service, Shipping with Amazon for third-party merchants selling on the marketplace which negatively influenced FedEx and UPS shares by more than 4% on the day of the announcement.
Meanwhile, FedEx outlined their position as the leader in the delivery sector last week by pointing to Amazon’s lack of “logistics service infrastructure, capabilities, technology and knowledge” which would be “needed to compete.“
Analysis from Wall Street Journal is predicting that Amazon will double their investment in their shipping services this year. The move will set to decrease its reliance on FedEx and UPS.
It is one thing for Amazon to decrease its reliance on other providers and another for it to be a competitor. How far do the marketplace’s ambitions stretch?