Amazon is turning the enormous shipping network it built for its own retail business into a service for virtually any company. Through the newly launched Amazon Supply Chain Services, businesses can hire Amazon to transport raw materials, store inventory, fulfill orders and deliver packages—even when those products are not sold on Amazon.com. The service combines freight transportation by ocean, road, rail and air with warehousing and last-mile delivery under a single logistics platform.
The venture could significantly disrupt the shipping industry because Amazon already possesses much of the infrastructure needed to compete with traditional carriers. Its network includes fulfillment centers, aircraft, trailers, shipping containers and thousands of delivery vehicles. Rather than building a logistics company from scratch, Amazon is now selling access to a system developed and refined through decades of handling its own rapidly growing package volume.
The strategy resembles Amazon Web Services, which transformed the computing infrastructure Amazon originally created for itself into a highly profitable cloud-computing business. Amazon could now attempt the same approach with logistics, turning warehouses, trucks and delivery capacity into a major new source of revenue. Early customers reportedly include companies such as Procter & Gamble, 3M, American Eagle Outfitters and Lands’ End.
For UPS, FedEx, DHL and other logistics providers, the greatest threat may be Amazon’s ability to offer businesses an integrated system instead of separate freight, warehousing and delivery contracts. Amazon can also use technology and existing package volume to fill unused capacity and potentially offer faster or more competitive service.
The change will not happen overnight. Managing complex industrial supply chains is different from delivering Amazon orders, and many companies may hesitate to depend heavily on a competitor that also operates one of the world’s largest retail marketplaces. Still, Amazon Supply Chain Services marks a major shift. Amazon is no longer simply building a delivery network to support its online store—it is positioning that network as a global logistics business capable of challenging the industry’s most established names.
