The question on many observers’ minds is whether the retailer is ultimately planning to become a shipper in and of itself—a business akin to its cloud services, say—or more of a way to keep its own fulfillment costs down.
That appears to be answered in the filing of its recent annual report with the Securities and Exchange Commission, where the Wall Street Journal says the company identifies itself as a “transportation service provider” and its competitors as “companies that provide fulfillment and logistics services for themselves or for third parties, whether online or offline.”
Time will tell what exactly Amazon’s delivery ambitions are. Certainly it may make a lot of sense for the e-retail giant to maximize efficiencies and build a shipping business as it continues to expand its fulfillment network.
So far, the nation’s biggest trucking companies say they’re not worried about such ambitions, saying last week that there’s a lot of business to go around. As the Journal notes, the market for delivery, freight forwarding, and contract logistics is estimated to be at least $400 billion, according to Colin Sebastian, a Baird Equity Research analyst.
Sebastian himself appears to believe that Amazon is building its vast fulfillment capabilities for its own sake, but that it will naturally become a line of business for them. The move might help them trim some of its rising shipping costs, which drew concern from one analyst during its most recent earnings call. Overall shipping costs in the fourth quarter jumped 37% to $4.17 billion, which the company attributed to "demand from Prime members" and higher inventory from third-party sellers in its warehouses, reports the Journal.
“We continue to expect Amazon to add logistics primarily to meet its own growth, but over time, and in incremental fashion, we believe it is likely that Amazon will offer this expertise to third parties to help subsidize those costs,” Sebastian told the Journal.