Amazon Shipping Launches: What are the 3 Things Required For It To Succeed?

Supply Chain
Written By Rick Watson

Business Insider and WSJ report that Amazon is (re-starting) an independent multichannel shipping service that competes with both FedEx and UPS.

Some details:

  • Within the US, will not include US outbound.

  • Sellers who ship from their own warehouse can choose Amazon as a carrier.

  • Amazon had previously started this service in 2018 as a beta, and then during the lockdown, but given the surge in pandemic volume, this experiment was put on pause.

  • This marks 6 countries now where Amazon has an independent shipping service -- including France, Spain, India, UK, Italy and now the United States.

Anytime Amazon does something in the market, it pays to take note of it. The competitive dynamics are tough in the market now. There is more supply than demand, there are more facilities than demand, and services than demand.

To me, this speaks to a market consolidation that could happen where bigger players gain share. Remember, Amazon doesn't operate a truly independent shipping service. It's a retail marketplace with guaranteed volume that operates a shipping service, of which it is able to offer infrastructure to others at marginal cost.

This still sounds like a long-term winning formula to me.

The elephant in the room with Amazon from a transportation point of view is always trust, however, want to know what the antidote to trust is?

Rates, Service Levels, and Patience.

Three things that many companies don't have, Amazon generally has in abundance. Don't trust Amazon today? They are usually content to "keep doing what they are doing" and wait it out.

In truth, I expect more from Amazon in supply chain services. A lot more. I expect Amazon to sell every level of its transportation network - end to end, middle mile, and last-mile. That's just what you do with fixed assets, and it's been Amazon's playbook for 20 years now since they opened their marketplace.

The trust question is a trickier one, but I do believe there is a long-term solution here too.

Rick Watson

Rick Watson founded RMW Commerce Consulting after spending 20+ years as a technology entrepreneur and operator exclusively in the eCommerce industry with companies like ChannelAdvisor, BarnesandNoble.com, Merchantry, and Pitney Bowes.

Watson’s work today is centered on supporting investors and management teams incubating and growing direct-to-consumer businesses. Most recently, in partnership with WHP Global, Rick was a critical resource in architecting the WHP+ platform, a new turnkey direct to consumer digital e-commerce platform that powers AnneKlein.com and JosephAbboud.com.

Watson also hosts a weekly podcast, Watson Weekly, where he shares an unbiased, unfiltered expert take on the retail sector’s biggest players.

In the past year alone, Rick has spoken at many in-person and virtual events as well as podcasts on topics ranging from retail/ecom to supply chain/logistics and even digital grocery including CommerceNext IRL, ASCM Connect, and Retail Innovation Conference.

https://www.rmwcommerce.com/
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