LinkedIn Post on “Amazon Is Testing Its Own Delivery Service” April 25 2014
Today’s article in The Guardian by Heidi Moore offers an opportunity to future analyze Amazon’s move into the delivery space, as discussed in the attached file.
At first it would appear to be one dimensional and single focused; i.e., Amazon is only dealing with its own deliveries and it only focuses on packages, not the entire and broadband ‘postal spectrum’ that the US Postal Service covers and which Amazon cannot replicate in the near term without substantial investment cost to its shareholders (more on this in a later article), nor the ‘logistics spectrum’ that FedEx, UPS and DHL make their domain, and thus is limited in scope. The common business wisdom is that the top two to three market leaders dominate their marketplace and subsequent entry by challengers can be foolhardy. On closer read what Amazon is actually doing is following its Amazon Webservices playbook and Silicon Valley recruiting strategy. In the former case where Amazon built and operates a massive cloud infrastructure for its own operations, it is leveraging these to market to other customers (corporate and government, including the US Government) at highly competitive rates, operational capabilities and efficiencies. Effectively as Amazon builds out it’s ‘last mile’ delivery network it can also leverage this assets to its’ own Amazon merchants, and new customers, as well as poach eBay and Etsy merchants, and the eCommerce merchants of the ‘Big 3’ USPS, FedEx and UPS thus reducing their cost efficiencies and driving up their rates..
And if it seems far-fetched; i.e., why would Amazon get into cost intensive distribution networks look at some of its hiring moves which mirror Silicon Valley giant’s headhunting of key engineers from competitors. Amazon is acquiring top logistics and operations talent from the Big 3.
© John Manzolillo April 25, 2014