Sink or swim? Amazon needs shipping providers to integrate – or it will cut them adrift

Is Amazon destined to become the last word in logistics? ParcelHero expert David Jinks shared his thoughts on the future of the marketplace giant with the audience at Digital Ship’s Maritime CIO Forum, last week in London. Following this appearance David addresses some of your thoughts and comments in this blog.

Amazon uses its global supply chain as a sales tool. Put simply it wants all of us to become members of its Amazon Prime membership scheme. That’s because Prime members spend twice as much as non-members. So Amazon uses Prime delivery options to tempt in new members.

Prime Members love the free deliveries on all items, and same day and one-hour deliveries Prime Now services offer in urban areas.

Obviously then, the faster Amazon can bring more traders into its supply chain, the more it can use delivery options to draw in yet more Prime Members. Hence options such as Fulfilment by Amazon.

Fulfilment by Amazon (FBA) allows even modest marketplace traders to join Amazon’s delivery network and manage and sell inventory across Amazon’s EU marketplaces with a single Seller account.

The crunch is, it’s all part of Amazon’s avowed aim to be the pipeline through which everything is delivered.

Neville Smith on LinkedIn:

I’m looking forward to hearing from David Jinks about his predictions for Amazon’s impact on container shipping. In particular why it would want to do its own shipping when it can pay next to nothing (plus fuel) for it now.

Think about what you see on your doorstep. Amazon Logistics now delivers most of your Amazon packages, not the Royal Mail, for example. That’s because traditional delivery providers can’t offer the same day and one hour – not to mention grocery – deliveries Prime Members expect.

And don’t go thinking Amazon Logistics is only about delivering its own products. Amazon has moved into Chinese/US logistics as a provider of services.  Amazon Logistics+ is targeting small and mid-sized Chinese vendors – they might be Amazon sellers, they might be Alibaba users. In a nutshell, any wholesaler in China can use the service, not just Amazon sellers.

So How long before Amazon controls its own fleet of ships too?

“Amazon is a threat if we don’t do a good job for them,” the boss of Maersk said recently. “If we don’t do our job well, then there’s no doubt that big, strong companies like Amazon will look into whether they can do better themselves.”

Giant retailers like Amazon need better information about shipments to manage supply chains as effectively as possible. You’ll hear elsewhere in this conference Maersk is rolling out a new digitization strategy to modernize an industry in which bookings often still take place by phone.

As Maersk’s ceo, says: “Amazon is not interested in phones and email — they want to be hooked up electronically and digitally, so the business transacts on its own,”

So, in answer to some of your Twitter and Linked In questions, Amazon isn’t looking to get in to shipping, possibly by taking over an ailing line, just to save itself money. It’s about integrating Amazon orders with its overall supply chain, so that if there’s a sudden need for products it can speed up a ship; and likewise ensure it sails as economically as possible if the shipments onboard are not time sensitive.

It wants this type of information exchange to be digital and virtually antonymous.

And don’t go thinking Amazon won’t at least consider leasing a fleet of ships. Amazon already runs its own aircraft fleet! As of January, Amazon Air had a fleet of 32 Boeing 767 freighters flying out of Kentucky. It’s certainly prepared to put its money where its transport demand is.

 

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