I was considering writing an article about which company will be most disruptive to supply chains over the next few years, when lo and behold what pulls into my driveway but an Amazon-branded panel truck delivering a drill I ordered a couple days ago. Is that fate or what? At the very top of my list in the ‘Disrupter Hall of Fame’ would undoubtedly be Amazon, and their recent moves in logistics represent yet another supply chain area that ought to be preparing itself for disruption from this ecommerce giant.
Sure, there are other companies worthy of consideration. You could check out Elon Musk’s Tesla, with its electric cars, battery technology, and rocket ships. Or maybe Google, with autonomous vehicles, Google Glass, and their ubiquitous search functionality. Apple might be a good call, with their phones, tablets, watches, music, and gadgets. And Facebook is always worth a look. I’d stick with my pick of Amazon, though. There’s nothing out there to indicate they’re slowing down.
It isn’t only logistics where Amazon has focused its innovation. I’ve been an admirer since they opened their virtual doors back around 1997, and the breadth of their accomplishments is amazing. To reach the pinnacle as the world’s largest ecommerce site they’ve disrupted a number of different businesses and processes, along the way raising the level of innovation to a point where almost everyone else is playing catch-up. Some examples:
• Amazon Prime raised the stakes for shipping cost transparency and value-added services.
• Amazon Web Services (AWS) has had enormous impact across the spectrum of businesses, reducing the cost of cloud data storage and removing barriers to scaling for small businesses.
• Amazon’s purchase of industrial robot company Kiva and implementation into its DCs lowered costs and forced competitors to make similar moves just to keep up.
• The Amazon product line has reached a scale where the site is a de facto ‘go-to’ for on-line shoppers.
• Amazon’s Kindle drove a stake into the heart of booksellers everywhere.
• On the fulfillment side, Amazon has pushed the envelope on same-day delivery and continues its experimentation with drone package delivery.
• On the customer experience side, Amazon has created tools such as one-click checkout, wish lists, recommendations, dynamic pricing, etc.
These are but a few of the innovations Amazon has pulled off to achieve their leadership position. Many others (such as an IoT infrastructure, overseas expansion, brick & mortar stores) are in the pipeline and others are too numerous to mention.
So, why is this company so disruptive? It seems to be a combination of a visionary leader, Jeff Bezos, huge amounts of capital, and an investor community that believes in Bezos’ approach to growth by eschewing profits to fund capital projects. It’s rare that a public company operates in this manner, but you can’t argue with their success.
I began this article talking about a van delivery, and fulfillment seems to be in focus for Amazon right now. They’ve recently purchased thousands of trailers as well as a couple of European transportation companies. Combined with the potential for drone deliveries, same-day delivery and the fact that Amazon has offered 3PL-type services for awhile, competitors as well as suppliers of delivery and logistics services ought to be getting a little nervous.
If you’re a supply chain or B2C ecommerce professional who wants to keep abreast of innovations that could disrupt your industry, you can either read lots of articles and make guesses, or follow my recommendation to just keep a close eye on Amazon. Even their forays into projects that initially sound sort of goofy (drone package delivery?) often shake things up.