We’ve all heard of Amazon. In fact, most us have probably used it sometime or other to order goods.
And it remains the driving force in the online world, forever pushing the boundaries of the products and services it offers. Revolutionising and disrupting the multiple industries it serves.
But for those of us involved in logistics and warehousing, does Amazon offer us an opportunity or does it threaten our very existence?
As the founder and CEO of Amazon, Jeff Bezos’ vision during the company’s early years was to offer better prices, more choice and more delivery offerings. From humble beginnings as an online bookstore the company now sells everything from A to Z, offering consumers everything they could possibly want.
It does this directly with its own online channels and via 70,000 entrepreneurs who list their products on Amazon Marketplace, looking to leverage an alternative revenue stream, but ultimately paying a commission plus storage plus fulfilment.
Although now an accepted business model, there have nevertheless been accusations that it uses unscrupulous business practices. Where for example Amazon lacks experience in a potential new business stream, it launches it through Amazon Marketplace, then brings in retailers and watches how they sell and operate. Then they enter the market themselves and undercut the retailers and reap the rewards.
This is exactly what happened to Figleaves, an online UK lingerie retailer, who had an exclusive deal to sell the Shock Absorber bra range. Amazon monitored what they did and then was able to go directly to Shock Absorber, undercut Figleaves and secure exclusivity for the range. And this is why brands such as Adidas, Nike and Dyson will not sell on Amazon Marketplace for fear of the same happening to them.
Their mastery of e-commerce is well known and there’s no doubt that for the parcel carriers Amazon has been excellent for business. But in Amazon Prime their grip on 3PL, including warehousing and delivery, is tightening. In 2015 Amazon took 10% of all new UK warehousing space, a truly phenomenal figure, and one that is potentially detrimental to other companies wanting to expand their warehousing operations.
Is Amazon looking to create a warehousing and logistics operation to rival existing 3PLs and carriers? Certainly, if the Figleaves scenario is anything to go by why would we believe that the logistics situation would be any different? According to Bezos this is not the case and Amazon is creating a logistics network to complement those that already exist. But can the company be trusted?
Amazon is a highly aggressive and competitive business after all, known for its revolutionary and disruptive approach. And this is why it has been so successful.
Its shareholders do not expect a dividend, the company is run leanly and it invests its profits back into fulfilment centres. This is why it’s been able to purchase so much of the UK’s warehousing space and invest in its future.
A lot of the company’s success is put down to The Amazon Way – 14 leadership principles that have guided and shaped its decisions and distinctive leadership culture. And why it has been able to successfully enter and disrupt new markets.
And the logistics and warehousing sector can learn a thing or two from the principles that Amazon practices.
So, whatever you think about Amazon, friend or foe, there are things to admire about the way they do business, but many questions and plenty to debate.
The Amazon Way – John Rossman
Amazon Friend or Foe – zupplychain.com