Amazon.com, Inc. (NASDAQ:AMZN) has been rumored to launch its own global shipping and logistics venture that will compete against strong contenders in the delivery industry, FedEx Corporation (NYSE:FDX) and United Parcel Service, Inc. (NYSE:UPS).
Even if the e-commerce giant claims that it’s leasing of planes and operating of cargo ships is basically in response to the heightened demand during the holiday season, analysts believe that Amazon has subtly been expressing its intention to fully dive into the shipping business as it potentially is expected to be launched this year.
It can be recalled that in 2013, a proposal to the company’s senior management team presented a bold global expansion of Amazon’s FulFillment By Amazon venture.
Growing E-Commerce Industry and Tight Rivalry
The Seattle-based company is set not only to take on FedEx and UPS but it is also widely expected to compete with Chinese counterpart, Alibaba Group Holding Ltd (NYSE:BABA). Both Alibaba and Amazon are vying for the top spot in the immensely growing online retail market, which is expected to surge a trillion dollars in valuation by 2020, with nearly one billion shoppers all over the world.
Amazon will deliver its renewed e-commerce strategies this year as it launches the “Global Supply Chain by Amazon”.
With the said venture, Amazon is at the center of the logistics industry as it also gets rid of mediators who handle paperwork related to cargo and international trade. The company seeks to bypass brokers that will result to cost-efficient shipment services. Moreover, the new business allows clients to book cargo space online, which Amazon dubs as “one click-ship for seamless international trade and shipping”.
On Becoming the Sole Leader
According to Amazon, the ease and transparency of the disintermediation it offers its clients will be its key on becoming the sole leader in the market— be it in the e-commerce or in its prospective shipping venture. As the company has always envisioned, sellers will no longer have to avail of the services of UPS or FedEx— they can directly book with Amazon.
In materializing its ambitions for growth, Amazon is to partner with third-party carriers for the global enterprise. The strategic plan of Amazon includes squeezing these third-parties out as soon as the venture is established enough to operate on its own.