We’ve written extensively about Amazon and their ever-more-obvious plan to phase out reliance on third party partners to do last mile shipping. Most recently, The Wall Street Journal took a deeper look at Amazon’s shipping and logistics operations and found that, due in large part to massive growth in building of warehouses all over the US, the company now does its own deliveries in at least 21 states.
This is only the latest in a string of clues as to where Amazon is looking. It has become quite clear that Amazon wants to do with shipping the same thing they did with Amazon Web Services – build their own infrastructure and then use it themselves, while potentially offering the service to other companies.
According to research done by MWPVL, Amazon is already doing last mile deliveries in at least 21 states, shipping from around 70 warehouses across the country. Strikingly, the study found that over 40% of people in the United States currently live within 20 miles of an Amazon warehouse – that’s a 780% increase in just about 6 years.
For Amazon, it comes down to dollars and cents – they are spending big for shipping costs, and it’s hurting them.
The amount of money it costs Amazon to ship goods continues to exceed the revenues they generate from those deliveries. You don’t have to be an economist to realize that this is an unsustainable model for them.
The Wall Street Journal put together an excellent infographic that gives insights:
HOW AMAZON MIGHT TAKE OVER LAST MILE LOGISTICS
Will “Operation Dragon Boat” come to fruition? Every few months we get another hint that, in fact, it’s happening faster than anyone could have expected. While both Amazon and other players in the industry say that Amazon is not looking to take over its own logistics and shipping, or potentially becoming a competitor in the shipping market, it’s hard to deny that the winds of change are blowing.