Amazon’s Expansion as a Logistics Service Provider

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By: Gibson M -- Research Analyst, Logistics and Transportation

01 January, 2017

ARTICLE

The logistics industry is becoming more and more technology-based with technology providing advantages in terms of cutting costs, increasing speed, and serving as an ideal platform for the fast paced e-commerce industry. With logistics ripe for technology-driven disruption, Amazon, which leverages technology better than any of its peers, is likely to disrupt the market by means of its logistics service. Amazon has made its logistics presence felt by entering into trucking and adding airplanes to serve air freight mainly for its own delivery requirements. The company’s push toward controlling the front, middle, and backend logistics network to ensure that its parcels (Amazon Prime orders mainly) are delivered on time means that its dependency on third-party logistics service providers will continue to decrease gradually.

This article describes Amazon’s entry into logistics and its capability to leverage technology to control entire end-to-end delivery operations of its products. The article also discusses the possibility of Amazon becoming one of the leading logistics’ service providers in the U.S. and its impact on the future of logistics.

Highlights

  • Amazon currently has leased 32 cargo planes while an additional six are intended to be added to the existing fleet matrix, highlighting its expansion of logistics services for delivery of Prime products.
  • Amazon introduced a pilot program named “Amazon Shipping” where the prices were 50 percent cheaper when compared to well-established players like UPS and FedEx.

Amazon and Endless Diversification

Amazon, which started as a single cell book-selling website in the 1990s, has diversified its portfolio and has built the world’s largest online store. The company can deliver almost anything to its customers in a single day by leveraging internet and technology and has changed the purchasing behavior of people around the globe. The company has changed the face of the retail business wherein many companies are now moving toward e-marketing to sell their products online.




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