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64 DC VELOCITY JULY 2015 www.dcvelocity.com
had any specific impact on the 3PL
industry to date, and 10 said that
it had. When asked to specify what
that impact had been, most were
unwilling to disclose that information for competitive reasons.
Those who were willing to share
their thoughts identified several
competitive impacts. Many retail
startups are relying upon Amazon to
handle warehousing, inventory man-
agement, and fulfillment for them.
Without Amazon, the CEOs said,
those activities would likely be man-
aged by a 3PL. Some respondents
noted that Amazon provides 3PLs’
existing customers with an alternative
channel to reach both business-to-busi-
ness and business-to-consumer markets.
Furthermore, Amazon is driving change
in supply chain and logistics practices,
and its initiatives in those areas often
force 3PLs to rethink their own service
offerings, the CEOs suggested. And final-
ly, Amazon’s huge shipment volumes and
the demands it places on parcel delivery
companies like UPS and FedEx, partic-
ularly during the holidays, often limit
shipping and delivery capacity and cause
delays for 3PLs seeking to use similar ser-
vices during the same periods.
A POTENTIAL COMPETITIVE THREAT
Those surveyed were also asked whether
they consider Amazon to be a 3PL. Only
six CEOs said yes, and all six indicated that
their companies currently compete with
Amazon in various aspects of their busi-
ness. Those include managed transporta-
tion, managing the tactical side of oper-
ating a supply chain on behalf of custom-
ers, and distribution of products to end
customers on behalf of clients. One said,
“They are facilitating supply chain services
on behalf of customers, hence I classify
them as a 3PL.” Among those who did
not classify Amazon as a 3PL were three
CEOs who called it a 4PL (fourth-party
logistics company), a “retailer first,” and
an “industry disrupter.”
Seventeen of the 25 CEOs surveyed
indicated that they believe Amazon is a
potential competitor for 3PLs on a much
larger scale. They see that potential com-
petition in six specific areas.
First, with the continued expansion of
the company’s warehousing, distribution,
order fulfillment, and transportation services, Amazon might become a formidable competitor by offering shippers a
broad range of services that 3PLs already
provide. As one CEO wrote, “Amazon
developed a substantial infrastructure to
support the sale of books, DVDs, and
music that now only require digital distribution. They need to do something with
that infrastructure.” Second, Amazon’s
existing platforms support the entrance of
many new shippers into the marketplace,
and the company can easily capture those
new shippers’ demand for services. Third,
