specialreport THIRD-PARTY LOGISTICS
SPIRAL CONVEYING.
STRAIGHT UP.
As the market leader in spiral
conveyors in the logistic industry we
think of solutions for handling cases &
SKU’s. It’s what we do.
At AmbaFlex it’s not just about
building the right equipment, it’s
about developing a special solution
for you. Here’s to spiral conveying.
Spiral elevators for goods-to-man
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As for Amazon’s competitive threat to existing 3PLs, those
companies would be well advised to prepare for the possibility
that Amazon will make a major push into their industry. As
noted earlier, Jeff Bezos has often been quoted as saying that
he is not sure whether retailing will continue to be Amazon’s
core business. If it’s not retailing, then it may well be the logistics service industry.
What makes the threat even more significant is that Amazon
continues to avoid pressure from the investment community
about earnings, which have been minimal to this point. That,
coupled with investors’ tolerance for Amazon’s continued
involvement in diverse activities ranging from diapers to
drones, would seem to give Bezos the freedom to pursue
acquisitions in the 3PL space if he were so inclined. If he
decided to move in that direction, Amazon could—through
a series of strategic acquisitions and business alliances—very
quickly become an important player in the 3PL industry.
We have seen this happen before, when similar moves were
orchestrated by private equity companies, such as when
Apollo Capital built Ceva Logistics.
Of course, becoming a major player doesn’t necessarily
guarantee success in what is already a highly competitive
industry. Nevertheless, 3PLs’ contingency plans should reflect
the potential entry of Amazon into the industry and its use of
pricing as a means of attracting market share. Its past history
of setting prices with limited concern for costs suggests that
it could pose a real destabilizing threat to an industry that
already suffers from price compression.
Obviously, Amazon may decide not to go in that direction.
Recently, there have been signs that Amazon’s investors are
becoming impatient and are looking for increased profits.
Those pressures may force the company into a less-aggressive
expansion posture—something that would be seen as good
news in the 3PL community.
Notes:
1. Scott Kirsner, “Acquisition puts Amazon rivals in awkward spot,” The Boston Globe (December 1, 2013) http://www.
bostonglobe.com/business/2013/12/01/will-amazon-owned-
robot-maker-sell-tailer-rivals/FON7bVNKvfzS2sHnBHzfLM/
story.html.
2. Thad Reuter, “ 20 million and counting: A new estimate
for Amazon Prime membership,” Internet Retailer (January
7, 2014) http://www.internetretailer.com/2014/01/07/20-mil-
lion-and-counting-new-estimate-amazon-prime-members.
3. Jefferson Graham, “Amazon profits take a Prime cut,”
USA Today (July 25, 2014): B1.
4. Adrian Gonzalez, “Amazon Inside P&G Warehouses: A
Case of ‘What’s In It for We,’ ” Talking Logistics (October 15,
2013).
Dr. Robert C. Lieb is professor of supply chain management at the D’Amore-McKim
School of Business at Northeastern University, and Dr. Kristin J. Lieb is associate professor of marketing communication at Emerson College.
