Amazon means to take down UPS, DHL, FedEx 'The Baird report pointed out that some of the recent job listings also hint at Amazon's growing investment in the parcel-delivery and logistics business'.
280 million active customers that Amazon means to take back from UPS, FedEx and DHL. We have a different, better high end customer base with high margin verticals and no wonder FedEx is saying nice things about Brad. These bigger companies will be on the prowl, they can buy companies with positive cash flow at present but they will have a more stagnated future. imo
The latest data shows where Amazon might be headed next — and it should terrify UPS and FedEx
Tue, Oct 20, 2015, 1:22pm EDT
Amazon is continuing to bulk up its fulfillment-center network, indicating it's serious about stepping into a territory historically owned by companies like UPS, FedEx, and DHL: the logistics and transportation business.
According to new data by the e-commerce software maker ChannelAdvisor, Amazon has added 21 new logistics facilities globally over the last 12 months, up 14% from last year, bringing the total to 173 facilities worldwide.
Of the 173 facilities, 104 are in the North America region, with the rest spread across Europe and Asia.
The 173 logistics facilities include the large fulfillment-center warehouse; sortation centers, where packages get presorted for shipping; and Prime Now hub, a separate building to store one-hour delivery items.
Having such an expansive network of facilities helps Amazon provide faster service to a wider audience. But ChannelAdvisor CEO Scot Wingo thinks it's also a sign that Amazon is getting serious about challenging incumbents like UPS and FedEx in the logistics and transportation space.
"As Amazon builds out the logistical network, we are hearing more and more stories of Amazon employees delivering packages to businesses and houses. It seems that Amazon is doing the math and is cutting out third party carriers like UPS and FedEx in Prime Heavy areas," he wrote in a blog post.
Call it ATL
Last year, Amazon was reported to be testing its own private-delivery network to have more control over its shipping expenses. Currently, Amazon mostly relies on third-party shipping vendors like UPS, FedEx, and DHL for delivery.
Baird Equity Research also envisions Amazon soon getting into this space, according to a note published Monday. It even came up with a name for what could be Amazon's logistics arm: "Amazon Transportation and Logistics (ATL)."
"Among other opportunities, Amazon has 'powerhouse potential' in the large transportation and logistics market, dominated by global enterprises such as DHL and UPS," the report said. "Our assessment of Amazon's broadening fulfillment ecosystem, internal domain expertise, and early initiatives with Prime Now to offer third-party delivery suggests there is evidence Amazon may ultimately pursue more comprehensive third-party services."
It added: "We believe Amazon may be the only company with the fulfillment/distribution density and scale to compete effectively with global UPS/FedEx/DHL, and with an investor base that historically is tolerant of margin volatility relative to the 'profit mandates' of traditional Transportation & Logistic shareholders, a significant competitive advantage in our view."
The Baird report pointed out that some of the recent job listings also hint at Amazon's growing investment in the parcel-delivery and logistics business. Some openings include: "Senior Program Manager — Last Mile Transportation SME," "Driver Experience Manager," and "Network Manager — Amazon Logistics Freight."
If true, this will help Amazon reduce the cost it takes to deliver its shipments and drive the company toward more profitability, said Guru Hariharan, an ex-Amazon engineer who's now running his own startup, Boomerang Commerce, a pricing-optimization software maker.
"If Amazon can stop paying FedEx and start controlling their own destiny in terms of the costs of fulfillment and shipping and transportation, it increases their profit margin and they could go into driving more value for the customers," he told us.
https://finance.yahoo.com/news/latest-data-shows-where-amazon-234429616.html
Contract Logistics, Amazon's (AMZN) Next Massive Opportunity
by Taboola Sponsored Links
October 19, 2015 7:44 AM EDT
Colin Sebastian at RW Baird published a note this morning highlighting the opportunity for Amazon (NASDAQ: AMZN) to begin to offer third party logistics services in a similar way that it offers Web Services. Transportation and logistics is the next massive market opportunity for Amazon but rather than developing it as another internal business unit, this may be spun out. Amazon currently operates 167 distribution facilities around the world, totaling more than 100 million sq. ft., and continues to grow. In North America, Amazon operates 92 facilities (including local sortation centers). The analyst believes that this could be a $5 billion opportunity if it only captures 1% marketshare in the various segments of the industry.
Amazon has created ancillary services that help the company subsidize investments that were originally aimed at growing the core e-commerce business. Amazon's third-party Marketplace is a good example which leverages the scale of Amazon's e-commerce traffic and supporting fulfillment infrastructure. Amazon may be the only company with the fulfillment/distribution density and scale to compete effectively with global providers. Amazon was able to leverage not only its position as the leading destination for e-commerce with ~280 million active customers, but also as a top-ten web property overall, generating more than 175 million unique visitors monthly.
Early initiatives with Prime Now to offer third-party delivery suggests there is evidence Amazon may ultimately pursue more comprehensive third-party services. Certain segments of the logistics market, last-mile parcel delivery and contract logistics, are segments where Amazon could provide a compelling alternative to traditional shipping/logistics providers. There is currently ~$170 billion in market capitalization in legacy companies that may be ripe for disruption.
Ideal customers for ATL (Amazon Transportation & Logistics) would range from SMBs to enterprise businesses that lack financial resources, expertise, or technology horsepower to manage fulfillment/logistics internally. The global contracted logistics market is very fragmented, with the top 10 companies comprising only 20% of total revenue, but DHL accounts for 8% of that 20%.
Domestic Parcel Delivery is an $80 billion US market dominated by UPS (NYSE: UPS), FedEx (NYSE: FDX), and DHL. Amazon has been partnering in this space to fulfill the last mile delivery for its Prime service but recently, its endeavors to build out last mile service for Prime Now, Prime Fresh and Flex are through new relationships and internally developed services that could be extended in a similar way that Prime was extended to third party sellers and AWS is offered as a separate service.
https://www.streetinsider.com/Analyst+Comments/Contract+Logistics,+Amazons+(AMZN)+Next+Massive+Opportunity/10980712.html