DC Velocity - May 2016

NAA-1097 ISS: 4/16

Imagine the Possibilities

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and SJ forecasts that number to rise to $16.4 billion in 2016,

$22.34 billion in 2017, and $29.6 billion in 2018.

THE ALIBABA THREAT

Unless a better mousetrap comes along, Alibaba remains Amazon’s sole long-term threat, Jindel said. In a bid to build logistics capabilities to establish itself as the sole middleman in all e-commerce transactions, Alibaba owns a 48-percent stake in Cainiao.com, a logistics consortium founded in 2013 to support deliveries across China and worldwide. According to a mid-March story in the publication Techcrunch, Alibaba, through Cainiao, operates 128 warehouses and 180,000 express-delivery stations in China, offering same-day delivery in seven Chinese cities and next-day delivery in an additional 90. On Nov. 11, 2014, the date of the popular “Singles Day” in China, Cainiao handled 278 million packages, according to the story. Other reports said Cainiao will spend billions of dollars through the rest of this decade and into the next in order to deliver goods anywhere.

Cognizant of the threat, Amazon will do what it can to limit Alibaba’s ability to help manufacturers sell directly to consumers, Jindel said in his summary. One tailwind for Amazon is that while it has established a decent footprint in China, Alibaba is unlikely to make a dent in Amazon’s U.S. dominance. “That train has left the station,” he said in a phone interview.

SJ’s report is not the first study to examine Amazon’s fulfillment strategy and its implications for the retail supply chain. But it stands out for several reasons. Jindel is a seasoned and highly regarded consultant with a reputation for producing thoughtful reports bereft of any eyeball-luring sizzle. Furthermore, Jindel has been a long-time Amazon skeptic. While consistently lauding the company for executing a highly effective model, he has for years been dubious about its profit-generating potential. Jindel held to that position as Amazon’s stock marched from $8 a share some 14 years ago to today’s closing price of $683.50 a share. The takeaways from his firm’s research have made Jindel rethink his views, he acknowledged.

What may go unnoticed is that, despite its burgeoning size, Amazon controls just a fraction of the total U.S. retail market, Jindel said. According to SJ estimates, e-commerce accounts for about 12 percent of all retail sales, and Amazon has a roughly 30-percent share of the e-commerce market. Thus, Amazon has roughly 5 to 6 percent of the overall market, and there is a lot of share opportunity still available to it, Jindel noted.

—M.S.

alliances

The Asset Intelligence subsidiary of I.D. Systems Inc. has acquired a new customer that is deploying its Veriwise intermodal container tracking solution. … United Kingdom department store House of Fraser is using Datalogic’s Skorpio X3 mobile computers to improve its price management processes. … To help its clients obtain greater transportation visibility, analytics, and savings, 2PL Advisors has partnered with enVista, a supply chain consulting and IT services firm. … Crane Worldwide Logistics was awarded a contract to manage 35,000 individual line items of heavy-duty spare parts for Intertruck in its state-of-the-art facility in Dubai. … Rotech Healthcare has selected Descartes Systems Group’s cloud-based Route Planner on-demand solution to automate planning, dispatch, and data collection processes for its fleet.