Amazon Closing In On Last Mile Logistics
If you missed the news, Amazon has crossed 66% delivery of its own parcels in the US - delivering 415 million parcels in July.
Just think of where they've come in 5 years. This kind of accomplishment is breathtaking was virtually unthinkable - widely panned by pundits around the world.
The big loser in this equation is UPS, who has traditionally been the carrier of record for many Amazon parcels. They have the most up-to-date network, but the most dependency on Amazon - even though the number has been pegged somewhere around 11%.
So what's next for Amazon? I think continued operational efficiency, driving down costs, and reducing fulfillment variance. Amazon's record of service improvement across the board is pretty well known.
Even from my own purchases, Amazon is essentially back to normal with delivery, despite massive volume increases. Is it any wonder Dave Clark just got a massive promotion?
Michael Gutfraynd asked if Amazon now counts as a third-party carrier. In the UK, it already does. It feels like it’s only a matter of time everywhere. Amazon only builds things that can scale. Gutfraynd added “No industry is really safe, Amazon not only goes wide, but deep. Every new offering is adjacent to what already exists and strengthens the original (e.g. Whole Foods makes marketplace grocery stronger) while making the new better (WF delivery & Amazon lockers)”
Grant Morrow asked about FedEx’s decision to drop Amazon.
UPS exposure was an order of magnitude higher to Amazon, so the downside to FedEx is almost zero.
Amazon wasn't giving them any more business anyway due to reliability (their ground network has been unreliable at points)
Even if FedEx was reliable, Amazon's goal was to be more reliable, which meant they needed more volume to get there. There was no FedEx business to win.
Over 10 years ago, Scot Wingo sagely predicted America would be eating Amazon cereal. I did not bet against that prediction then or now.
