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Amazon not a threat to carriers, costs a threat to omnichannel, EDX16 mostly threat-free


If I shared with you my cynicism about the many predictions that Amazon is going to become a take-on-all-comers carrier business, it probably wouldn’t surprise you. Because for all the speculation on that matter in recent months, there’s been precious little analysis. Until now, when I suddenly find I in good company.
And so it was that I found myself almost moved to tears when I read that an analyst from Morgan Stanley has been pouring cold water on the suggestion that Amazon has FedEx, UPS, et al in its sights.

Brian Nowak is an executive director at Morgan Stanley in New York and he points to a number of reasons why Amazon’s logistics ambitions are not as wild as some might have you think.

There’s the twin issues of cost and investment, Mr Nowak points out, and the related question of reaching critical mass. He reckons UPS drivers deliver between 200 and 300 parcels each per day in urban areas (in the US). But he doubts Amazon could get to the point where its drivers were delivering around 100 parcels per day: there simply aren’t enough orders being placed. And let’s not lose sight of one of the $11.5bn Amazon had to spend on fulfilment last year, to ship 2.2bn parcels.

According to Mr Nowak, whose opinions were covered by the Financial Times, there may well be sufficient density – of population and orders – in urban areas for Amazon to manage that in-house effectively. But beyond that the idea starts to lose credibility, fast. Which is broadly in line with the views expressed in this column in the recent past.

So don’t expect Amazon to eat FedEx or UPS for breakfast any time soon. But do expect to see plenty more speculation this year … some stories are just too good to be ignored, I guess.

Something else to expect – or look forward to, or even despair about – is the UK / EU referendum that takes place on 23 June. There are arguments on both sides of the Leave or Remain divide about which outcome is best. We’ve heard from some eDelivery readers expressing their views on the topic.

One consequence of being part of the EU is the free movement of labour, and this could be one of those things that will certainly suffer in the event of a Leave vote win in June. The retail sector employs more people in the UK than any other, and relies heavily on staff who’ve come to the UK from other European countries. If the free movement of people is removed, that supply of labour will dry up. That’s not an insurmountable problem, but it will have consequences and in a guest-authored article from Manhattan Associates’ Craig Sears-Black, we hear more about that.

If you have an opinion to share, whether it’s about the UK / EU referendum or anything else, you can email me direct via this link.

Elsewhere on eDelivery, we have details of the JDA/PwC global retail CEO study, which touches on the threat to omnichannel profitability from continuing to operate in silos, and at plans to increase charges to offset growing fulfillment costs.

In a little over two months eDelivery Expo (EDX16) will be under way. We hope as many readers as possible will join us there this year – last year more than 5,000 people attended the two day event, which is co-located with InternetRetailing Expo (IRX). With a view to encouraging you to register, we have a summary of what to expect on Day One of EDX16.

You can also read my interview with Professor Jan Godsell, who attends on Day Two, where we discuss the idea of future-proofing, making small bets, and keeping your options open.

And finally, I recently caught up with Jan Onnenberg, co-founder of Liefery, who operate Zalando’s instant returns service. We talked about the importance of convenience, consistency, and confidence.

As always, if you haven’t subscribed to eDelivery yet we’d love it if you did. You’ll get a weekly newsletter summarising the main stories we’ve covered, and we’ll keep you informed of other big announcements. But we won’t spam you – no one’s liked spam since the 1940s, have they? You’ll find details on subscribing here. And if you’re not receiving a copy of the magazine you’ll find details on that too.

You can also join our LinkedIn group for analysis and networking as it happens, or if you want your updates in real-time find us on Twitter @edeliverynet.

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