Daily Insights

The Next Amazon Web Services Is Already on the Road, in the Air, and on the Rails

By: Oweise Khazi | Nov 14, 2019

It’s no secret that Amazon has helped lay the groundwork for e-commerce. However, its offline business has left more questions than answers. Amazon dabbled in traditional retail with the launch of Amazon Book stores in 2015 and Go stores in 2018. But the retailer’s brand’s warehouse presence remains limited mainly to the West and East coast.

 Despite these mixed results, Amazon is striving to be an omnipresent fulfillment network, even in one of the most unlikely places—the shopping mall. Earlier this year, Amazon partnered with Kohls to offer consumers package-return counters at over 1,000 locations. Amazon has always excelled in delivery logistics and is designated as a Master as per the Gartner Supply Chain Top 25. Bringing this delivery expertise to other brands as a service provider is a move straight out of the (AWS) playbook.

 Amazon has now entered the Supply Chain sector with a formal Multi-Channel Fulfillment service. The retailer has always led fulfillment innovation and spent over $800 Million to establish stronger control over its first and last mile delivery legs. Amazon has also invested in airport hubs, sea freights and delivery vans since 2018. In fact,  Amazon’s own delivery vehicles accounted for over 25% of package delivery last year, growing from 0% just five years ago.

 This move makes sense as a way to increase returns on a necessary investment. Amazon spent $34B in fulfillment costs last year and will spend at least $40B in 2019. By leveraging its sunk costs in planes, trains, and automobiles, the brand can offset costs and also bring greater control to delivery in the years ahead.

Amazon’s moves in the fulfillment space will impact delivery time frames and retailers must revisit their fulfillment channels to ensure that they are keeping pace.

 Walmart has kept pace with Amazon in fulfillment innovation—the retailer is ramping up curbside delivery and already offers the service in over 2000 locations. Additionally, Shopify is a Canadian company that offers proprietary e-commerce capabilities including complete website set up, establishing a retail-point of sales and delivery support. Shopify also offers more customer data, allowing brands to understand their consumers better, which can be invaluable for small businesses and startups. 

Leveraging third-party delivery partners to keep up to pace with consumer expectations, innovating to leverage current assets and ensuring that your brand has multi-channel delivery capabilities are table stakes in the evolving delivery game.