Delivering unexpected options: Can Amazon win the logistics game?
Tuesday, February 20, 2018
When a business needs to send a package, it has a familiar suite of options: USPS, UPS, FedEx or DHL. These companies all have at least a few decades under their delivery belt — the youngest, FedEx, is coming up on its 47th birthday.
With that sort of history, it's little wonder that companies hesitate to stray from the big four when it comes to shipments. Everything from shipping costs to expected delivery times is more or less uniform. With potential last-mile savior Uber mired in legal difficulties and increasing pressure on the gig economy to fall in step with legislation, there seemed to be little in the way of challengers in the field — until now.
A to Z Meets 3PL?
Amazon has long made a name for itself in finding unique solutions to customer problems, particularly when it helps their own interests. While their drone delivery concept might be stalled, they're still hard at work closing the time gap for product deliveries.
Consider the Amazon Flex program — a gig-economy umbrella that touches everything from their Amazon Logistics package delivery to their PrimeNow service, newly invigorated by the company's buyout of grocer Whole Foods. Through this program, Amazon aims to bypass the "big four" and deliver its own packages (including groceries).
The service facilitates getting the company's products to customers, but they're gearing up to think outside of the arrow-emblazoned cardboard box. While the recent rollout of the service is only slated to deliver in Los Angeles, and only for companies that already sell through its marketplace platform, it poses a substantial threat to the big four.
New and versatile
Amazon founder and CEO Jeff Bezos has followed a Google-like model for growth: Figure out what other companies are doing right, and do it better. Sometimes it works, sometimes it doesn't, but it's difficult to argue with how pervasive and dependable the company's iconic Prime membership has been.
Customers know that when a Prime icon appears on a product page, they'll get what they're ordering, and they'll get it quickly. In some ways, it's become the e-commerce version of a green traffic light: a signal that the browser should continue fearlessly to checkout, because everything is A-OK.
All the branding in the world can't cement that feeling without experience to back it up, and Amazon has worked hard to gain and keep customer trust. Though cynics opine that it may have to do with Amazon's overly-permissive, customer-leaning return and refund policies, it's difficult to argue with the idea they've effectively built a legacy.
An audience rich for conversion
If you already successfully do business on Amazon, you're likely looking to drive down costs wherever possible. Faced with rising postage costs and the hassle of dimensional weight pricing through 3PLs, suddenly a new option starts to look pretty tempting. After all, you're already set up on Amazon, so what do you have to lose?
That's likely the idea that Amazon is counting on for initial adoption. If they perform at or above expectations during the rollout — and let's be honest, recent shipping woes and price hikes have set the bar pretty low — they've effectively wedged themselves in to a distinguished club, despite the company itself being only 18 years old.
Will Amazon be able to go toe-to-toe with carriers that have, in some cases, more than a century of logistics experience on the not-so-scrappy e-commerce giant? Only time will tell, but suffice it to say that 3PLs should be keeping a nervous eye on Bezos' latest pet project.
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