We use cookies to provide you with a better experience. By continuing to browse the site you are agreeing to our use of cookies in accordance with our Cookie Policy.
  • INDUSTRY PRESS ROOM
  • ABOUT
  • CONTACT
  • MEDIA FILE
  • Create Account
  • Sign In
  • Sign Out
  • My Account
Free Newsletters
  • MAGAZINE
    • Current Issue
    • Archives
    • Digital Edition
    • Subscribe
    • Newsletters
    • Mobile Apps
  • TRANSPORTATION
  • MATERIAL HANDLING
  • TECHNOLOGY
  • LIFT TRUCKS
  • PODCAST ETC
    • Podcast
    • Webcasts
    • Blogs
      • One-Off Sound Off
      • Global Logistics and Risk
      • Empowering Your Performance Edge
      • Analytics & Big Data
      • Submit your blog post
    • Events
    • White Papers
    • Industry Press Room
      • Upload Your News
    • New Products
      • Upload Your Product News
    • Conference Guides
    • Conference Reports
    • Newsletters
    • Mobile Apps
  • DCV-TV
    • DCV-TV 1: News
    • DCV-TV 2: Case Studies
    • DCV-TV 3: Webcasts
    • DCV-TV 4: Viewer Contributed
    • DCV-TV 5: Solution Profiles
    • Parcel Forum 2022
    • MODEX 2022
    • Upload Your Video
  • MAGAZINE
    • Current Issue
    • Archives
    • Digital Edition
    • Subscribe
    • Newsletters
    • Mobile Apps
  • TRANSPORTATION
  • MATERIAL HANDLING
  • TECHNOLOGY
  • LIFT TRUCKS
  • PODCAST ETC
    • Podcast
    • Webcasts
    • Blogs
      • One-Off Sound Off
      • Global Logistics and Risk
      • Empowering Your Performance Edge
      • Analytics & Big Data
      • Submit your blog post
    • Events
    • White Papers
    • Industry Press Room
      • Upload Your News
    • New Products
      • Upload Your Product News
    • Conference Guides
    • Conference Reports
    • Newsletters
    • Mobile Apps
  • DCV-TV
    • DCV-TV 1: News
    • DCV-TV 2: Case Studies
    • DCV-TV 3: Webcasts
    • DCV-TV 4: Viewer Contributed
    • DCV-TV 5: Solution Profiles
    • Parcel Forum 2022
    • MODEX 2022
    • Upload Your Video
Home » Will Amazon dominate last-mile delivery? Consensus, right now, is probably not
newsworthy

Will Amazon dominate last-mile delivery? Consensus, right now, is probably not

October 5, 2017
Mark B. Solomon
No Comments

Is Amazon.com Inc.'s rumored move to start "last mile" deliveries for non-fulfillment customers in the U.S. another step in its plans for logistics domination, or is it an effort to keep up with ever-increasing demand by supplementing its current delivery network with its own capacity?

The Seattle-based e-tailer earlier this year launched a U.S. pilot of a service called "Seller Flex," under which it picks up goods at the warehouses of merchants that use Amazon to sell, but not to fulfill orders, and then delivers the products to the merchants' end customers. The service, which has been operational in India for two years, has begun testing on the West Coast ahead of a possible nationwide rollout during 2018, according to a story this morning on the Bloomberg website.

According to the story, a key motivation for the move is to ease strains on Amazon's fulfillment network, which has seen spikes in demand as the company's "Fulfillment by Amazon" warehousing, distribution, and delivery program has gained significant traction in recent years. By making pickups at customer warehouses, Amazon effectively de-emphasizes the need for merchants to rely on the company's resources for fulfillment, according to those commenting for the story who are familiar with Amazon's thinking.

A tip-off to the service may have come in April, when DC Velocity reported that Amazon was looking to recruit as many as 30,000 independent drivers to support a last-mile delivery service.

An undetermined number of merchants use Amazon as a virtual storefront to market and sell their products. However, they do not use Amazon for fulfillment. Those types of merchants are usually small businesses that can self-fulfill and don't have the order volumes to justify turning over the fulfillment function to a third party.

Businesses that don't use Amazon's fulfillment services will rely on other parties to deliver their goods. As soon as the Seller Flex story broke, the share prices of three companies that work in the last-mile space—Atlanta-based UPS Inc., Memphis-based FedEx Corp., and Greenwich, Conn.-based XPO Logistics Inc., took hits amid a knee-jerk reaction that Amazon's move was an effort to take business away from them. However, by the close of trading, UPS and XPO had recovered some of their losses, and shares of FedEx ended up on the plus side.

Satish Jindel, founder and head of consultancy SJ Consulting, said the rapid pace of Amazon's growth requires that it augment the services of its delivery vendors with its own network in order to keep up with demand and honor its customer commitments. Amazon could not handle last-mile deliveries on its own, given the burgeoning scope of its operations, Jindel said in a phone interview.

Colin Sebastian, who follows Amazon and e-commerce for investment firm Robert W. Baird & Co. Inc., said the move is not a market-share play but an effort to "leverage their increasing capabilities in logistics, and to exert more control over the end customer's experience." Sebastian agreed that the company needs to take some of the pressure off its own fulfillment centers.

Amazon is building out a transport and logistics network to support its "Prime" delivery service, which guarantees two-day delivery anywhere in the country on most products for a $99 annual fee. Its "Prime Now" service offers free deliveries within two hours. There is a $7.99 fee for deliveries made within one hour.

Within the past year two years, Amazon has leased 40 cargo airplanes and purchased thousands of 53-foot truck-trailers. Its Chinese subsidiary has received authority from the U.S. government to operate as a non-vessel operating common carrier (NVOCC) to move oceangoing cargo from China to the U.S. under its own bill of lading. In February, it announced plans to build an air hub in Cincinnati to support the two-day delivery product.

Transportation Air Trucking Maritime & Ocean Truckload Less-than-Truckload Parcel & Postal Carriers
KEYWORDS Amazon.com FedEx R.W. Baird & Co. SJ Consulting Group UPS XPO Logistics
  • Related Articles

    XPO integrates last-mile delivery data with Google and Amazon voice applications

    It may be last, but it's not really a mile at all ... yet

    USPS, regional parcel carrier OnTrac to launch "last-mile" delivery service in late summer

Marksolomon
Mark Solomon joined DC VELOCITY as senior editor in August 2008, and was promoted to his current position on January 1, 2015. He has spent more than 30 years in the transportation, logistics and supply chain management fields as a journalist and public relations professional. From 1989 to 1994, he worked in Washington as a reporter for the Journal of Commerce, covering the aviation and trucking industries, the Department of Transportation, Congress and the U.S. Supreme Court. Prior to that, he worked for Traffic World for seven years in a similar role. From 1994 to 2008, Mr. Solomon ran Media-Based Solutions, a public relations firm based in Atlanta. He graduated in 1978 with a B.A. in journalism from The American University in Washington, D.C.

Recent Articles by Mark Solomon

Coming together for road safety: interview with Joshua Girard

Off the rails

Freight rate spikes shaking up the C-suite

You must login or register in order to post a comment.

Report Abusive Comment

Most Popular Articles

  • Schneider welcomes first battery-electric truck

  • Fred Smith is not worried about Amazon

  • Outlook 2023: What’s in store for logistics/supply chain?

  • RJW LOGISTICS GROUP EXPANDS RETAIL LOGISTICS OPERATION TO DALLAS

  • Ports, maritime operators see tide turning as ocean freight tsunami subsides

Now Playing on DCV-TV

5afe63a5 7125 4318 b851 1e5738df1c91

Patterson Fan Co. | HVLS V-Series Ceiling Fan | Staging Area Air Movement

DCV-TV 4: Viewer Contributed
The Patterson V-Series is a high-volume, low-speed industrial ceiling fan that is designed to circulate a lot of air at a very low speed. ​These fans, ranging in diameters of 8’ all the way to 24’, are perfect for large, open spaces such as staging and shipping areas. One 24’ fan can generate a cooling effect of 6...

FEATURED WHITE PAPERS

  • The five best applications for robotic lift trucks in warehouse environments

  • Fulfillment Facility Improved Efficiencies by 4x

  • 3PLs: Complete Orders Faster with Flexible Automation

  • Reusable Packaging for the New Wave of Supply Chain Automation

View More

Subscribe to DC Velocity Magazine

GET YOUR FREE SUBSCRIPTION
  • SUBSCRIBE
  • NEWSLETTERS
  • ADVERTISING
  • CUSTOMER CARE
  • CONTACT
  • ABOUT
  • STAFF
  • PRIVACY POLICY

Copyright ©2023. All Rights ReservedDesign, CMS, Hosting & Web Development :: ePublishing