If you got your holiday packages in record time this year, you might thank Amazon--even if you didn't buy anything from the e-commerce giant.
The Seattle-based Amazon is looking to enter the $150 billion business of booking trucks--reportedly developing its own, Uber-like app to schedule and track shipments of its products, say, from a seaport hub to a distribution center. While the move could help streamline Amazon's massive sales operations, the company is expected to eventually license its shipping services to third-party retailers, too--and that's giving smaller shippers cause to kick into overdrive.
"This is the next piece in the jigsaw puzzle," said Cathy Roberson, a shipping industry expert, in an interview with The Wall Street Journal. "It's all falling into place for Amazon as a logistics provider."
Naturally, the news has many in the logistics industry spooked, as brokers anticipate that Amazon, if successful, could steal away business. (These companies generally help retailers manage their shipments, presenting a plan for how the cargo will get transported via land, sea, or plane.) But rather than head for the hills, the news is giving shippers more work than ever.
"The porters are nervous that Amazon could be coming after their business," says Zvi Schreiber, a serial entrepreneur and founder of Freightos, an international online freight-booking platform. He notes that the Amazon news has actually brought in more customers. The Hong Kong-based company has raised $23 million in venture capital and works with some 900 freight porters worldwide. "Their sense is to speed up their own automation," he says, "so it's actually driving carriers (shipping lines, airlines) to us."
Jeremy Bodenhamer, co-founder and CEO at ShipHawk, agrees that Amazon's continued expansion in logistics has been good for business. His company makes software that lets retailers book shipments, generate labels, and track deliveries online. It works with nearly 300 carriers, including UPS and FedEx, as well as smaller freight haulers and home delivery services.
"It's like 'He Who Shall Not Be Named: Amazon,'" Bodenhamer says, alluding to Harry Potter's Voldemort character in reference to the uptick in sales his company witnessed in 2016. The business, Bodenhamer says, generates around $10 million in annual revenue. "Everyone feels the Amazon pressure," he adds. Amazon controlled more than 30 percent of e-commerce sales over Cyber Monday this year, according to data from Slice Intelligence.
Jack Cohen, a serial entrepreneur and CTO of online-auction platform Paddle8, has felt some of the pressure that Amazon brings to market. "Shipping expectations have definitely been influenced by Amazon," he says. Paddle8 pays to use a tailored version of ShipHawk's platform to manage shipments from consignors to buyers. Because the company deals primarily in fine art, there are financial and legal ramifications if an item is damaged en route, so it's important for Cohen to work mostly with specialty carriers. That often means that packages aren't delivered as quickly as they otherwise would be.
Even if Amazon successfully develops a ShipHawk competitor, Cohen doubts that Paddle8 would adopt it. Given the company's unique shipping requirements, it would likely stick with specialty providers.
"In terms of what we're doing, the biggest challenge is harnessing the services of people who specialize in packing and shipping art," says Cohen. "My gut tells me that Amazon would not be working with hugely experienced people."
Amazon did not immediately respond to Inc.'s request for comment.
Still others doubt Amazon's intentions--remarking that the company may not be serious about developing an Uber-like app for shipping after all. "They [Amazon] have so many initiatives, and they're not afraid to lose money, so it's really hard to tell what they're going to get serious behind," notes Adam Price, the co-founder and CEO of tech company Homer Logistics, which manages deliveries for restaurants in New York City.
ShipHawk's Bodenhamer, speaking from his offices in Santa Barbara, goes so far as to call the news irrelevant.
"There are a lot of things that Amazon does that move things forward aggressively and make a difference," he says. "I don't think this is one of them."