RECAP: The Amazon Effect

February 25, 2019

Amazon has changed the game when it comes to transportation, logistics and the supply chain. Their business model has transformed the way consumers look at delivery and has, in many ways, altered the way our industry works. I read this article on Transportation Topics and wanted to summarize the article and include my thoughts surrounding this topic.

Author of the article, Sean Maharaj says, “The e-commerce giant’s entry into directly managing the distribution of its products has led to massive changes in the trucking and freight transportation industries and likely will lead to more over time.” Maharaj mentions the wide number of Prime branded cargo containers, from aircrafts to the semi-trucks we see on the highways. Ultimately, it seems their biggest impact on the industry lays in shifting the consumers’ mindset on how quickly goods should be delivered.

We live in a world where we frequently receive instant gratification, and with the millennial and gen-z generation, much of the population expects it. My daughter showed me a tweet via @LandonBromuto; I’ll paraphrase below:

Before Amazon Prime: “Wow, they said 8-10 days and my package came in eight! How nice.”

After Prime: “If I don’t get these cat coasters within 24 hours I am going to cry.”

The tweet, while in jest, does explain the change in consumer perception. Two-day, next-day and same-day delivery is no longer a luxury – but the standard. Maharaj discusses how last-mile delivery techniques could disrupt 3PLs, like Kingsgate, as well as other carriers. Essentially, this forces companies to partner or compete with the e-commerce giant.

By building their own network of drivers and independent contractors, as well as creating their own fleet of delivery vehicles, Amazon looks to handle last-mile delivery. For businesses that ship directly to consumer, the fiscal impact is huge, “with this short distance accounting for as much as 28% of the total delivery cost,” according to Maharaj.

Another article by Business Insider discusses how Amazon’s growing network of independent drivers is impacting the driver shortage – click here for more.

Lastly, the Amazon conglomerate is creating enough of a shift in the market to force others in the industry to follow-suit and make changes to fit our rapidly changing industry, OR to compete with them in some way, shape or form. Essentially, our society is changing, technology is evolving and those in the industry must follow suit or be left behind.

What are your thoughts on how Amazon is effecting the industry and the culture we live in?

All the Best,

Jeff Beckham