“Will Amazon Kill FedEx?”, asks Bloomberg. The main takeaway from this long Bloomberg feature is, surprisingly, that there is no new information, not one bit, regarding Amazon’s ongoing logistics expansion. The Bloomberg staff certainly wasn’t too lazy to look hard and long; and the premise for this feature from the journalists’ side most certainly was to produce (another) scoop on this. But alas.
So, the main insight here might be, that -besides the most certainly headlines making ramp-up this coming holiday season- Amazon is far from releasing something major regarding the company’s logistics expansion. Of course, this was always going to be a ‘slow’ iterative process. But this is still surprising. Bloomberg reported in February that Amazon would start the company’s “global supply chain” this year.
The Bloomberg feature provides a good summary of where Amazon is right now:
Two months after the Ohio announcement, Amazon leased 20 more jets from Atlas Air, an air cargo company based in Purchase, N.Y. Amazon has also purchased 4,000 truck trailers. Meanwhile, a company subsidiary in China has obtained a freight-forwarding license that analysts say enables it to sell space on container ships traveling between Asia and the U.S. and Europe. In short, Amazon is becoming a kind of e-commerce Walmart with a FedEx attached. (…)
Providing near-instant gratification on Amazon’s scale isn’t cheap. Last year the company spent $11.5 billion on shipping—nearly twice what it did two years ago. Along with leasing jets and buying trailers, Amazon has opened more than 28 sorting centers, 59 delivery stations that feed packages to local couriers, and more than 65 Prime Now hubs stocked with best-selling items that can be rushed to customers around the world, according to MWPVL International, a Montreal-based supply chain consultant.
Think about the consequences of this “kind of e-commerce Walmart with a FedEx attached” and add to this Amazon Marketplace, Amazon Prime, the Fire TV platform and the Alexa voice platform. (And AWS.) Also, this is the clearest statement by a former Amazon manager on how logistics create a moat against other tech giants:
Rossman, the former Amazon executive, says Bezos and his team also saw delivery as a way to fend off competitors who might have wanted to get into e-commerce—in particular Google, and later Facebook. “They’ve always thought one of their best defenses against Google and Facebook was that they don’t understand logistics,” Rossman says.
I think they are spot on.
I also think Amazon can’t fast enough expand its logistics. Because someone else will be building a new kind of logistics infrastructure on the back of a unique network: Uber.