What Does Amazon’s Dominance Mean for Logistics Services Providers? - Global Trade Magazine
  February 20th, 2016 | Written by

What Does Amazon’s Dominance Mean for Logistics Services Providers?

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  • Logistics providers can’t afford to cut ties with Amazon without losing significant volumes.
  • The role of technology will remain important as logistics providers seek an edge in a crowded market.
  • Logistics providers able to work with retailers to create the most cost effective services will prosper.

From its inception as an online bookseller, to its evolution to becoming the world’s biggest ecommerce company, Amazon’s influence and control over the sector has been significant.

Logistics services providers have profited from aligning themselves with the ecommerce giant’s rapid growth. However, as both Amazon and customers evolve, logistics services providers risk being left on the shelf.

One of the key findings of Transportation Intelligence’s newly-released report, “Global Ecommerce Logistics 2016,” is that as consumers continue to place their items in Amazon’s basket in ever-increasing numbers, logistics services providers cannot afford to cut ties with the ecommerce giant without losing significant volumes.

The report presents an in-depth analysis of the dynamic ecommerce sector. It also provides overviews and analysis of some of the key factors shaping the market, including consumer preferences and expectations, as well as new technologies and how they are being received.

Ti analysts have reviewed not only the market as a whole, but also the individual supply chain models of both global and regional online retailers. Companies profiled include those operating purely online, as well as those with multi- and omnichannel business models. They include Alibaba, Amazon, CNOVA, eBay, JD.com, John Lewis, Tesco and Walmart. In addition, the report includes an overview of the activities and strategies of logistics providers within the ecommerce market, including Clipper Logistics, DPDHL, Japan Post, SEKO and XPO Logistics.

The future of many logistics providers will be tied to their ability to provide ecommerce logistics solutions, according to Ti economist David Buckby. “Any provider that establishes a strong reputation in ecommerce logistics and finds a formula which yields a consistently decent margin is set for years of success,” he said.

In order to find an edge in an increasingly crowded market place, the role of technology will continue to hold significant sway, the report found. New ways for consumers to track and interact with deliveries, an increase in omnichannel adoption among retailers, the growth of wearable warehouse technology, and growing fears about cyber attacks are just a few of the ways in which technology will change the landscape of the sector dramatically in the next few years. Those logistics services providers who are able to work with retailers to create the most efficient and cost effective services will be the ones who prosper. Others will find themselves shelved.

Amazon continues to make headlines over its moves to own and control more of its supply chain. For logistics providers, highlighting their involvement in the existing process is vital to ensuring their survival independent of Amazon. As retailers continue to look for competitive advantages across the whole of the supply chain, those logistics services providers who can trade on their success as part of the Amazon delivery machine will be best placed to survive a fierce market which continues to grow in intensity.

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