News

Amazon One If By Land … Two Zillion If By Sea

If one’s entire reference for a company’s relative level of success were the verdict of public markets day in and day out, Amazon’s 2016 has gotten off to a rough start.  

They are one of a handful of powerful tech firms swept up in what is best described as a mass case of the willies breaking out among investors who are nervous about China, nervous about the Fed and nervous in general about the shape of things to come in the economy.  

Defanged: Can Facebook, Amazon, Netflix and Google rise again?” was the question the always judicious scribes at Yahoo Finance were asking as the week closed out. A question that prompts confusion in at least two ways.

The first spot of confusion rests in the fact that, as written, that question doesn’t make any sense. Defanging isn’t something one rises from; so while “Defeated: Can Facebook, Amazon, Netflix and Google rise again?” would have made sense, or, “Defanged: Can Facebook, Amazon, Netflix and Google get their teeth back?” also would have worked — what is actually on the page is technically gibberish.  

However, if that point seems a bit nitpicky for a Saturday morning, consider the fact that it is also the case that even if one mentally substitutes tighter verbiage into that headline, the basic premise behind the question is still pretty much gibberish.

Particularly as it relates to Amazon.  

Or, if not gibberish, at least evidence of an outlook somewhat overly dominated by the daily vagaries of the stock market — which even by its own rather volatile standards has gotten 2016 off to an interesting bang, especially for the tech stocks of the NASDAQ.  

Amazon’s stock price has taken an undeniable hit, but it seems the company has not gotten the memo about its recent defanging/defeats — or if it has, it seems to be pretty staunchly undeterred in its attempts to take over the world.

And while we at PYMNTS — in solidarity with tech and consumer writers everywhere — write about Amazon’s plans for world domination a lot, this week we are all being pretty literal about it since Amazon has actually moved to become an international shipping player. And that was the second big piece of shipping/logistics news of the week, as it came on the heels of the announcement that Amazon is quietly consolidating control of its own little shipping company.  

Oh, and there are probably close to 45 million households that are members of the Amazon Prime club in the U.S. — a number that is probably going to go up this weekend since the price will be temporarily down.  

So, just how defanged is Amazon looking this week?

Big Shipping Shake-Ups Part 1

The ball got rolling on Amazon’s Operation Shipping Shake-Up earlier this week with reports in The Seattle Times that Amazon is on the verge of announcing the acquisition of Colis Privé, a French package delivery startup, probably sometime next week. Part and parcel (we truly apologize for that pun and all the others that will follow) to that deal are ownership stakes in several other smaller companies previously tied to Colis Privé. That includes a delivery company based in and with rights to operate within the U.K.

And, according to the experts, this is likely just the early phases of the assault on ground shipping.

“We anticipate they will either make a similar acquisition on the U.S. domestic side (perhaps buying a regional carrier) or continue building out a delivery network internally,” John Haber, CEO of Atlanta-based supply chain consulting firm Spend Management Experts, told USA Today.

Haber further noted the power grab now apparent in Europe is very likely something of a very big test run for the big moves in its biggest market in the United States.

What remains an unclear but important piece of the puzzle as to whether or not Amazon is really trying to develop its own internal carrier service is what the current figures for Amazon’s internal processing are.

Jarrett Streebin, CEO of shipping and tracking startup EasyPost, told USA Today that while Amazon still relies on third parties for last-mile fulfillment, it’s safe to say that it’s been moving solidly in the direction of creating its very own shipping service, right under the noses of new rivals FedEx and UPS.

And, as it turns out, Amazon doesn’t just want to own a bigger piece of the package delivery game once they are on the ground or in the air (since the firm ended 2015 with rumors they were considering their own fleet of package delivering 747s) — they also want a piece of the waterways.

Big Shipping Shake-Ups Part 2

Then, there was the news Thursday that Amazon’s China unit has registered within the United States to operate in part as an ocean freight forwarder.

That designation would give that Amazon subsidiary the ability to aid in organizing the shipment of cargo from a supplier in a region to a customer in another region.  

The filing has reportedly been in place since Nov. 13 with the Federal Maritime Commission. The filing seeks registration as a non-vessel operating common carrier, which means that it will buy space to carry cargo on a third-party ship at a wholesale price and then has the ability to sell that same space to a manufacturer or other customer for a retail price.

The big play was first announced via Flexport, a San Francisco logistics startup which posted the news via its blog.

“Amazon China now has the appropriate paperwork to provide ocean freight services for other companies. This is Amazon’s first step toward entering the $350 billion ocean freight market.”

Apart from an even stronger hold on the end-to-end consumer experience, Amazon would also get a better handle on shipping costs.

Flexport also noted in its blog post that Amazon’s competitive advantage would help it leapfrog into shipping via automation, and it would be able to shave labor costs.

The precise details of how Amazon would manage such a shipping operation remain unknown, though there has been some speculation that one possible outline could be similar to the methods currently being used in the Fulfillment by Amazon warehousing business, which helps get goods from sellers based in China to Amazon-owned warehouses.

And The Shipping News Was Far From All The Headlines

Amazon’s biggest and most aggressive plays this week were in the shipping arena, since it looks like they are dead serious about building up a worldwide shipping and logistics business in record time.  

And that wasn’t even the only news.  

New Amazon Prime figures came in which indicate that about 38 percent of American households, according to the latest estimates, fall into that camp. Follow the math bouncing ball here as we calculate together how many people that is.

The Census tells us that there are 115.6 million households in the U.S. Thirty-eight percent of that is roughly 43.928 million households. And since there are 2.63 people per households, that means that 115.6 million people in the U.S. have some sort of relationship with Amazon Prime. And that number could will increase even more soon.

To celebrate its Golden Globe wins for “Mozart in the Jungle,” Prime Membership is up for grabs on the cheap. Amazon has also made a special effort to reach out to the video gamers of the world, with 20 percent off all new game purchases for members only.

And that doesn’t even touch the expansion of Echo into Mini-Me Form, or how Alexa could soon be the digital personal assistant that ends up following consumers from their house, to their car and everywhere in between on their phone.  

Amazon, it seems, is soon to be quite literally everywhere.  

And if this is what defanged looks like, with teeth is a little hard to imagine.  

——————————

PYMNTS STUDY: THE CROSS-BORDER MERCHANT FRICTION INDEX – JUNE 2020

The PYMNTS Cross-Border Merchant Friction Index analyzes the key friction points experienced by consumers browsing, shopping and paying for purchases on international eCommerce sites. PYMNTS examined the checkout processes of 266 B2B and B2C eCommerce sites across 12 industries and operating from locations across Europe and the United States to provide a comprehensive overview of their checkout offerings.

TRENDING RIGHT NOW