Amazon, 3PL Friend or Foe?

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With the recent news that e-commerce juggernaut, Amazon (NASDAQ: AMZN) launched logistics.amazon.com last week, many are wondering just how severe the impact will be on 3PLs. Much doubt was first met months ago when Amazon broken into the asset-based less than truckload LTL sector by offering the public options of operating their own granular delivery service. Continue reading to see if Amazon is a friend or foe for 3PL providers.

Key Takeaways :

  • While still using 3PLs, the industry can’t ignore the fact that Amazon is moving toward being positioned as direct competition.
  • According to WJSL:  “Amazon has been scaling back its use of third-party logistics providers as it takes greater control over how it moves shipments through its distribution networks.”
  • 3PLs will have to figure out how to preempt competition from the most recognizable brand on the globe.
  • With Amazon pushing next day delivery, it could provide a boost to 3PLs serving retailers in direct competition with Amazon
  • Freightwaves.com reports reactions to Amazon during Transparency19 Conference; Donald Broughton: Amazon has been a strong disruptor, but in business-to-consumer markets where the buyer is unsophisticated. He hasn’t seen any successful Amazon disruptions in a business-to-business application where the buyer has scale and is very sophisticated.
LTL Van in parking lot waiting to deliver amazon packages

Freight industry insiders and influencers seem to be split, with some dismissing Amazon as a threat to 3PL providers and others believing the company’s entry into logistics could significantly cripple providers. Friend or foe, it is simply too soon to confirmed.

Freightwaves.com reported the response to Amazon during the Transparency19 Conference. Industry thought leader Donald Broughton, Managing Partner at Broughton Capital, was recorded as recognizing the Amazon as “a strong disruptor, but in B2C markets where the buyer is unsophisticated,” however not in B2B where the customer “has scale and is very sophisticated.”  Many 3PLs have reported that Amazon’s recent push to deliver on its promise of 1-day shipping has in fact boosted sales as they work to service retailers that are in direct competition with Amazon.

On the other, and despite the fact that Amazon is still working with 3PLs to handle its massive shipping demands, providers will not be able to ignore the company’s new position as direct competition. According to WJSL:  “Amazon has been scaling back its use of third-party logistics providers as it takes greater control over how it moves shipments through its distribution networks.”

Also known for having the flexibility to offer services at significantly lower prices, Amazon may also be able to undercut 3PL providers who are not able to sustain services at lower rates.

While the ultimate ramifications of Amazon Logistics remain to be seen, it is undeniable that 3PLs must figure out how to preempt potential competition from the most recognizable brand on the globe.

Sources:

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