It seems like all guns are fixed on Amazon. From Walmart to Target and now Best Buy, the “traditional” brick and mortar retailers are trying to make up ground they lost to the online retail powerhouse Amazon.
Earlier this month, Walmart announced its purchase of Jet.com for $3 Billion. Most observers and people in the know saw this as a direct move to catch up to Amazon in the online retail market.
Today it seems that Amazon’s position as #1 online retailer is becoming more precarious. The most recent indication of this can be found in Best Buy’s quarterly earnings report.
As of the writing of this post, Best Buy shares were up nearly 20% on the day. Why? Because in its earnings report, the company stated their online business grew nearly 24% for the second straight quarter.
Best Buy CEO Hubert Joly stated that one of the main reasons for the explosive growth was “narrower delivery windows” – a strong indicator of how customer expectations have impacted the need for supply chains to be more efficient.
It’s clear that online retail is becoming a more heated race and that means the volume of order made online, and as a result home deliveries of the products ordered, will increase significantly. The speedy rate of change offers both threats and opportunities for shippers.
While Amazon seems to be looking to take over all of its own shipping (and possibly go head to head with “traditional” 3PLs), the incumbents still have a huge role to play in the online retail economy.
As the way consumer buy products moves more to online, shipping companies need to re-invent their supply chains, by not only putting the customer at the center, but also understanding that operational efficiency is a crucial piece of the puzzle.
Old models of how supply chains should be structured are no longer practical. There needs to be serious investment in new technologies to replace outdated “legacy” systems, as well as a fundamental understanding that the last mile is where competitive advantage is created.
Best Buy is just the most recent example of how retailers are focusing more online and how, in turn, this has a huge impact on shipping.