Amazon Air Continues to Grow According to Updated Study

The strategy seems to be coalescing around a similar situation to what FedEx has in Memphis or UPS in Louisville. The group mentions that the needs of Buy With Prime are also factored into the continued growth of the network.

Here are the important points:

* The primary Amazon Airport in North America, Cincinnati CVG has expanded 71% this year so far. All indications are that this airport is the nerve center of Amazon’s air network.

* Expansion beyond CVG however has slowed down to only about 4% growth.

* Amazon is up to about 88 planes overall, but Amazon doesn’t own these planes they are leased. And Amazon does not employ pilots, its pilots are contractors.

* There are now 73% of the US population within 100 miles of an airport served by Amazon Air.

A few notes from me about this:

* Amazon’s new Buy With Prime service is trying to get longer tail items from sellers, not just faster-Prime items that have traditionally been in Amazon’s fulfillment warehouses.

As Buy With Prime expands, Amazon will be left with more inventory farther away from customers that needs to have a low, date-definite promise date. The reason is that these items are not moving as quickly so Amazon will not be able to afford to position these items close to customers.

* One important thing to note about Amazon’s Logistics network is that it is primarily designed for businesses sending things to consumers, unlike FedEx or UPS’ networks.

For others like AEO and Shopify that are putting together logistics networks without planes, there is an extremely different process going on here.

AEO Quiet Platforms had $7M in Capex in the first half of the year. That would buy the facility toilet paper in Amazon's network. A network without planes puts extreme pressure on inventory location close to customers to meet a 2 day promise. If slow-inventory is in the Northeast and needs to go to Seattle, the plane comes in the late afternoon, and goes out after midnight to arrive the next afternoon, it may need another day to get through sort centers and last mile. (Some of this routing information is from the report)

Shopify is hoping to enable a "good enough" capability that does not require hardly any capital investment. Their announced $1B is about one-tenth what you need to create one of Amazon's single large automated facilities. It's a similar strategy for AEO, although they have the 7 (that I read/counted?) Quiet facilities, and stitch together software from other's networks. As a result, 3 days is best case scenario from these investments.