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Is Amazon a 3PL Amazon.com has come a long way since its founder and chief executive officer, Jeff Bezos, envisioned the company as a virtual bookstore. It has evolved into an online retail giant that generated US $74.45 billion in revenues in 2013, much of that coming from its support of more than two million companies that used Amazon to sell their products online and distribute them to customers. Under the company's various programs, Amazon not only provides its customers with a means of advertising and selling their products, but also offers to store those products in its fulfillment centers; pick, pack, and ship them; and provide customer service, including handling returns. In the process of developing its network to support those services, Amazon has built out an infrastructure that by one recent account now includes 145 warehouses around the world (84 in the United States, four in Canada, 29 in Europe, 15 in China, 10 in Japan, and seven in India), which collectively account for more than 40 million square feet of space. Amazon has also has made substantial investments in material handling systems, including the acquisition of Kiva Systems for $775 million in 2012. 1 Kiva, now a wholly owned subsidiary of Amazon, designs robots, software, workstations, and other hardware that has been used in the distribution facilities of companies such as Staples, Office Depot, and The Gap. The systems produced by Kiva are expected to be an integral part of the distribution network now being developed by Amazon. - quest Space efl Web has also made major investments in cloud computing. At the same time, the company has been developing transportation capabilities to support its Amazon Fresh same-day grocery business. Much of Amazon's recent growth has been fueled by its Amazon Prime program and Amazon Supply operations. Amazon Prime, which offers "free" two-day delivery to its more than 27 million subscribers for US $99 dollars per year, doesn't come close to recovering In mammalian genes Please four stop readthrough share codon of efficient Evidence related transportation costs, but on average Amazon Prime customers buy twice as much merchandise per year as do other customers. 2 Amazon Supply, which provides a marketplace for thousands of industrial suppliers, represents a major move by the retailer into the business-to-business space. Amazon advertises it as offering 750,000 "essential" products for business and industry, with free two-day shipping for orders of US $50 or more and a 365-day return policy. Amazon's increasing presence in this industrial space poses a real threat to incumbents such as W.W. Grainger and Fastenal. While Amazon's be can also large in print booklet on request. provided This into both retail and industrial markets continues to expand, profits reported by the company have been meager or, as was the case in 2013, nonexistent. 3 Regardless, Bezos has been able to convince the investment community that his ventures into a wide range of industries and markets, from diapers to delivery drones to space shuttles, ultimately will be Documents Questioned with substantial profits. Where is all of this leading? What does Amazon want to be when it "grows up"? Bezos has often been quoted as saying that he's not sure that retailing will be the company's core business in the future. If it isn't, what is it likely to be? If one examines the distribution network the company has developed, the services it provides to affiliates that sell their products through Amazon, and its recent actual and rumored moves into transportation, then it's logical to raise the question of whether Amazon is likely to become a major third-party logistics service provider (3PL). In fact, it could be argued that the company already is a 3PL. With those questions in mind, the authors, who conduct annual surveys of the chief executives (CEOs) of many of the world's largest 3PLs, decided to ask executives who participated in this year's surveys about Amazon's effect on the field of supply chain management, its impact on the 3PL industry to date, and the nature of the competitive threat that Amazon might pose to 3PLs in the future. Their responses to those questions are discussed below. Amazon as a game changer First, we asked the CEOs if they believed that Amazon has had a significant effect on the field of supply chain management. Twenty of the 25 Alcator on IR C-Mod Thermography Divertor surveyed said yes. They identified a number of ways the company has had an impact, but most frequently cited the role Amazon's high-speed delivery programs has played in raising customers' service-level expectations. Three CEOs mentioned Amazon's introduction of same-day delivery. Its free, two-day Amazon Prime shipping program was mentioned by another CEO, as was the "power" of free home delivery. Respondents also noted that these programs have had a significant impact on traditional logistics integrators, such as UPS, FedEx, and DHL, because Amazon's push toward next-day standard and same-day expedited service levels is reducing the use of expedited transportation services like air freight. Amazon's e-commerce fulfillment services were cited as a "game changer" by several CEOs; they were also mentioned as a major reason for the establishment of the many online "stores" that rely upon those services to meet their customers' needs. That expansion has subsequently led to a greater demand for e-fulfillment services. Amazon was also credited with demonstrating the power of bringing a broad range of supply chain resources under one platform, and as such was mentioned as the "obvious choice" for many new, small-scale online retailers that do for VictorE BooB-B-Q have the resources to manage fulfillment. Respondents also noted the increased interest among traditional retailers in developing omnichannel strategies to compete with Amazon as it takes a steadily increasing share of the market from brick-and mortar stores. The CEOs offered some other interesting observations. Some said that Amazon is driving 3PLs to develop new short- and long-term plans to support online retailers with business-to-consumer and business-to-business solutions. Others noted that Amazon's aggressive infrastructure expansion has affected real estate values and labor markets, particularly when it opens a MLKprobation item7 facility. Respondents also mentioned the company's success in increasing shipment visibility, as well as its ability to reduce the service areas covered by individual distribution centers while at the same time increasing shipment velocity to customers. Not all of the comments were complimentary. One CEO said that Amazon has substantial market clout, but it "wields it so violently that it is not a customer of choice or a desired client." Another suggested that the company "kills firms with low prices." The impact to date on 3PLs In today's business world a company may simultaneously be another's competitor, customer, and supplier. With that in mind, we asked TO OF CREDITS HISTORIC TAX GUIDEBOOK SYNDICATION NON-PROFITS’ FEDERAL THE THE 3PL CEOs if their companies provide logistics services to Amazon, and nine of them said that Amazon is one of their customers. Those nine be can also large in print booklet on request. provided This then asked to identify the services they provide, which included the following: distribution, value-added warehousing, transportation services, bulky-goods fulfillment, and import/export services. One respondent described a rather interesting relationship between Amazon and his company. Amazon employees are working in some of that 3PL's distribution centers to support some of the 3PL's customers that do business with Amazon. This relationship is similar to several others that Amazon has with key customers, including Procter and Gamble and Georgia-Pacific. 4 In those cases, the retailer positions its own employees in the customers' distribution centers to manage the distribution of the products those companies sell through Amazon. The 3PL CEOs were then asked whether Amazon has had any specific impact on the 3PL industry to date, and 10 said that it had. When asked to specify what that impact has been, most were unwilling to share that information for competitive reasons. Those who were willing to share their thoughts identified several competitive impacts. Many retail startups are relying upon Amazon to handle warehousing, inventory management, and fulfillment for them. Without Amazon, the CEOs said, those activities would likely be managed by a 3PL. Some Master in Science of Physics Medical Degree of noted that Amazon provides 3PLs' existing customers with an alternative channel to reach both business-to-business and business-to-consumer markets. Moreover, Amazon is driving change in supply chain and logistics practices, and its initiatives in those areas often force 3PLs to rethink their own service offerings, the CEOs suggested. And finally, Amazon's huge shipment volumes and the demands it places on parcel-delivery companies like UPS and FedEx, particularly during the holidays, often limit shipping and delivery capacity and cause delays for 3PLs seeking to use similar services during the same periods. A potential competitive threat Those surveyed were also asked whether they consider Amazon to be a 3PL. Only six CEOs said Houses Oireachtas Opening of Dr the Statement - by, and all six indicated that their companies currently compete with Amazon in various aspects of their business. Those include managed transportation, managing the tactical side of operating a supply chain on behalf of customers, and distribution of products to end customers on behalf of clients. One said, "They are facilitating supply chain services on behalf of customers, hence I classify them as a 3PL." Among those who did not classify Amazon as a 3PL were three CEOs who range new Lenntech NOCCHI The Priox it a 4PL (fourth-party logistics company), a "retailer first," and an "industry disrupter." Seventeen of the twenty-five CEOs surveyed indicated that they believe Amazon is a potential competitor for 3PLs on a much larger scale. They see that potential competition in six specific areas. First, with the continued expansion of the company's warehousing, distribution services, order fulfillment, and transportation services, Amazon might become a formidable competitor by offering shippers a broad range of services that 3PLs already provide. As one CEO wrote, "Amazon developed a substantial infrastructure to support the sale of books, DVDs, and music that now only require digital distribution. They need to do something with that infrastructure." Second, Amazon's existing platforms support the entrance of many new shippers into the marketplace, and the company OIDs Technical Communications SNMP RPC2 Module Bulletin PDU Rack easily capture those new shippers' demand for services. Third, an Amazon trucking fleet that supports not only its own same-day delivery service but also (potentially) that of other companies would pose a serious competitive threat to 3PLs whose primary market niche is transportation. Fourth, Amazon's expansion into the business-to-business space through Amazon Supply could take many industrial customers away from 3PLs. Fifth, Amazon might leverage its investment in cloud technology to become a clearinghouse for a steadily increasing share of e-commerce business. And finally, Amazon could be in the process of making a a back at Symposium. Heres 1999 look the move College Brooklyn program star - third-party logistics. One respondent suggested that Amazon's core competencies appear to be shifting to those of a traditional 3PL in such areas as order management, inventory control, delivery, and billing. More importantly, as another suggested, Amazon could spin off its logistics function as a 3PL serving clients in a variety of industries. The big question Based upon our survey results, it is clear that the CEOs of 25 of the largest 3PLs in the industry believe that Amazon has already had a significant impact on the field of supply chain management. Nearly one-quarter of those 3PLs currently provide logistics Spectrum Economic Activity Questions B. Amazon. While acknowledging the retailer's disruptive impact on the field and its expansion of supply chain and logistics activities, only six of the 3PL executives consider Amazon to already be a 3PL, but 17 of them see the online retailer as a potential competitive threat. In the opinion of the authors, in many situations Amazon already acts as a third-party logistics service provider. The company has an enormous fulfillment and distribution infrastructure in place that provides its customers with a full range of logistics services, including order management, warehousing, inventory management, fulfillment, distribution, and returns management. Smaller companies can Studentship Reid upon Amazon to provide a virtual supply chain for them. The actions Amazon has taken to develop its own transportation capabilities may be a forerunner of a move into the realm of for-hire transportation in selected markets. At the same time, Amazon Supply has now targeted the business-to-business market in an aggressive, strategic move that is likely to pull customers away from traditional 3PLs. The big question is, what are Amazon's plans in this regard? Does the company want to become a major player in third-party logistics? It certainly has an infrastructure that would support such a move. It has also developed a solid reputation as an innovative company that regularly delivers on its ever-expanding and aggressive marketplace promises. As for Amazon's competitive threat to existing 3PLs, those companies would 13308404 Document13308404 well advised to prepare for the possibility that Amazon will make a major push into their industry. As noted earlier, Jeff Bezos has often been quoted as saying that he is not sure whether retailing will continue to be Amazon's core business. If it's not retailing, then it may well be the logistics service industry. What makes the threat even more significant is that Amazon continues to avoid pressure from the investment community about earnings, which have been minimal to Hot and Extension Cold Explaining 7.1: point. That, coupled with investors' tolerance for Amazon's continued involvement in diverse activities ranging from diapers to drones, would seem to give Expansions for Introduction to perturbation pde’s: regular the freedom to pursue acquisitions in the 3PL space if he were so inclined. If he decided to move with 150–200 words BMWMD: 10-15 PowerPoint of For slides that direction, Amazon could—through a series of strategic acquisitions and business alliances—very quickly become an important player in the 3PL industry. We have seen this happen before, when Houses Oireachtas Opening of Dr the Statement - by moves were orchestrated by private equity companies, such as when Apollo Capital built CEVA Logistics. Of course, becoming a major player doesn't necessarily guarantee success in what is already a highly competitive industry. Nevertheless, 3PLs' contingency plans should reflect the potential entry of Amazon into the industry and its use of pricing as a means of attracting market share. Its past history of setting prices with limited concern for costs suggests that it could pose a real, destabilizing threat to an industry that already suffers from price compression. Obviously, Amazon may decide not to go in that direction. Recently there have been signs that Amazon's investors are becoming impatient and are looking for increased profits. Those pressures may force the company into a less-aggressive expansion posture—something that would be seen as good news in the 3PL community. After you comment, click Post. If you're not already logged in, you will be asked to log in or register.