FulfillmentCompanies.net surveyed its warehouse network of the best fulfillment houses throughout the US and Canada in order to see how logistics professionals are responding not only to Amazon’s recent expansion into a small parcel delivery service but also to Amazon’s overall position in the logistics marketplace. The goal of this survey was to determine how warehouse operators perceive Amazon’s growing dominance in the industry. The findings are below, including the questions that we asked on the survey as well as the percentage of responses.
Do you see Amazon’s recent announcement to recruit entrepreneurs to run small scale delivery services as an opportunity or threat for the logistics industry and in particular fulfillment companies like yours?
61.5% said “Opportunity”
38.5% said “Threat”
Do you consider Amazon fulfillment as a direct competitor to your business?
44.2% said “Yes”
55.8% said “No”
Do you believe Amazon’s dominance in online retail, growing fulfillment network, and now entrance into the shipping industry is moving the company more towards a monopoly position within the e-commerce logistics industry?
80.8% said “Yes”
19.2% said “No”
How much of a threat do you perceive for your company with regard to either Amazon’s fulfillment services and/or shipping services?
7.7% said “No Threat”
23% said “Mild Threat”
23% said “Neutral”
36.5% said “Slight Threat”
9.8% said “Strong Threat”
Conclusions to be Drawn from the Survey
While a majority of our respondents felt that Amazon’s new Delivery Service Program represented an opportunity rather than a threat, other responses reflected that warehousing companies feel that Amazon is a serious contender in the logistics industry that needs to be accounted for in any strategic plans. Nearly half of the respondents of our survey (44.2%) indicated that Amazon is a direct competitor to fulfillment warehouses. But even more alarming is that a vast majority of warehouses (80.8%) believe that Amazon is bordering on a monopoly. Almost 47% of the warehouses in our network indicated that they believe Amazon is either a slight threat or a strong threat to their business. All in all, fulfillment warehouse operators have a sharp eye on everything that Amazon is doing so that they can respond and best position themselves against this market leader.
Final Thoughts from the Warehouses in our Network
Below are some of the other general thoughts from the warehouses that responded to our survey:
- Amazon can never give the service level that smaller 3PL’s can deliver. If you fit in their box, then great, but most brands don’t fit in only the FBA box for their brand. This means there is a place for both FBA and higher service-level 3PL’s to co-exist.
- Amazon fulfillment services are definitely creating problems for the smaller fulfillment company and UPS and FedEx. I believe that they have a huge market share and are a definite game changer.
- UPS and FedEx have owned the small package delivery services for years. Amazon will be moving into this space as a disruptor and if they prove to have reliable service, may reduce to costs of shipping small packages. If Amazon can provide service to our customers on a 24-7 basis, this will certainly be a large threat to our company in the future or we will need to change our business model to include also working 24-7.
- I don’t like the Amazon business model where they use 3PL and delivery companies to start the business then take it over on a direct basis.
- Amazon has too much overhead to work with many of our customers. The ones that can go to Amazon recognize they must deal within their rules, their ever-changing rules. Our customers can’t afford Amazon’s ridiculous storage fees. However, many do because they sell their product, it’s more than a fulfillment house, and they’re the selling vehicle. We see it as a cycle, many clients have gravitated to Amazon but are beginning to develop strategies to sell more from their own sites. They’re beginning to see the value in education on eCommerce selling.
- While I agree that Amazon is building a monopoly with online retail I think there will always be plenty of logistics business for smaller providers who focus on their customers, provide excellent service, lower fulfillment costs and can offer customized flexible solutions unlike big companies like Amazon.
- We don’t understand why Amazon isn’t in the crosshairs of the Government for anti-trust violations. Their actions to gain vertical integration, and their pressure on the Government post office to lower costs clearly block competition. There will be different ramifications in the various countries they operate. For example, distribution companies in Vancouver Canada and fulfillment companies in Toronto will have different challenges with Canadian parcel post versus United states companies, such as fulfillment companies in Texas or fulfillment services in Colorado who deal with the USPS and other carriers.