Amazon Logistics: The Next Big Player in Delivery?

I sense that the customer empowerment phenomenon is happening broadly across everything we do at Amazon and most other industries as well. You cannot rest on your laurels in this world. Customers won’t have it.

Jeff Bezos, CEO of Amazon, 2017.
CEO of Amazon Jeff Bezos. Image credit: CNBC, 2018.

In 2017, Amazon CEO Jeff Bezos lauded ‘divinely discontent’ customers as innovation drivers, due to their ability to access information more quickly than ever before. Reading reviews, comparing prices from multiple retailers, how fast an item will be shipped or picked up creates a culture of high expectations that both Amazon and companies without their resources have to deal with.

The way Amazon has positioned itself to satisfy these high expections is something for any industry to keep an eye on. After all, the story of Amazon is that of a company that started with selling books online and expanded to selling practically everything, so no industry is safe.

Amazon’s reach is such that when the health-food focused Whole Foods was purchased in the US, there was a 12 billion dollar drop in grocery shares. When PillPack was acquired, it triggered a 15 billion dollar pharmaceutical share drop. The trend is, that when Amazon makes inroads into your sector, traditional retailers take the first hit.

Whole Foods. (Image Credit: Timothy A. Clary | AFP | Getty Images

It seems now that the next big market to be hit is logistics, as Amazon’s logistics.amazon.com page updated on June 28th, 2018, acting as a franchise model for courier delivery services. It is therefore only a matter of time before Amazon reveals plans for a comprehensive logistics network.

And who could blame them? Amazon is uniquely positioned to make a significant impat on the logistics sector. 243.5 million square feet of stoage space worldwide, 258 facilities in the US, 466 more in the world, and growing each year. Regional delivery centres like Prime Now and Whole Foods delivery hops, fulfillment, sortation and delivery stations. Amazon owns a whopping nine inbound cross-dock centres, which break imported shipments and then funnel them to the relevant fulfillment centres. They deliver between 5-10% of their own goods themselves at the moment, with courier partnerships worldwide covering the remaining massive load.

Amazon Fulfillment Center. (Image Credit: Zak Goodman, 2015)

Amazon also launched a trucking fleet in 2015, buying thousands of trailers to shift goods between fulfillment sectors. Amazon air has 32 boeing 767-300s, growing soon to a 40 aircraft fleet, and a 210 acre Amazon airport in Kentucky aims to support up to 200 flights daily. Ocean Freight is not growing as fast however, but the former CEO of UTi, once a top-20 global freight forwarder will be running its logistics program. A crowd-sourcing service which gets deliveries done through external contractors called Amazon Flex has also been launched.

amazon logistics
Amazon Locker. (Image Credit: University of Bath website.)

The tendrils of Amazons existing courier services reach far, with delivery to car trunks, remote door access to Amazon couriers, Amazon lockers, Apartment hubs and drone delivery patents. There is an app in the works for U.S. customers to track exactly where their package is every step of the way. Amazon is also aiming to productise pickup and delivery service in the form of Shipping with Amazon.

Hiring Plans

amazon logistics
Amazon is looking for 2,000 full-time employees to work at two fulfillment centers opening soon in Fontana and Rialto. Amazon is already hiring workers for its 600,000-square-foot fulfillment center in Fontana. The company will begin recruiting for the Rialto location, an 850,000-square foot operation, by the middle of this month. (Photo by Rachel Luna, The Press-Enterprise/SCNG)

Another area to look at to see how Amazon is positioning to dominant the logistics sector is its hiring plans. Currently there are 17,700 full-time vacancies on the website, 920 in logistics and transportation – 5% of Amazon jobs are currently in logistics. There are positions open for this setor in 23 countries, 60% of senior vacancies advertised require at least four years of experience, and there is a movement within the company towards cross-border rade and international logistics.

Many air freight jobs are also being offered, 105 mentioning air sopping. 1500 job roles across all departments related to importing, 110 for cross-border and 70 for cargo or freight, it’s only a matter of time before Amazon unveils its own productized freight system. May be excessively difficult for independent courier companies to compete with this in future.

amazon logistics
Amazon One flys over Seafair 2016 (Photo by Kevin Lisota)