- Transportation and logistics could be the next billion dollar opportunity for e-commerce companies. The global shipping market, including ocean, air, and truck freight, is a $2.1 trillion market, according to World Bank, Boeing, and Golden Valley Co.
- There is much at stake for legacy shipping companies, which have seen a boom in parcel delivery as e-commerce spending has risen. Twenty different partners currently share the duties of shipping Amazon's 600 million packages a year, with FedEx, USPS, and UPS moving the most.
- Retailers want to handle more of their own shipping for a variety of reasons.
- By handling their own shipping and improving on-time deliveries, retailers should be able to increase customer satisfaction. UPS could only deliver 91% of packages on time in the week leading up to Christmas 2015, according to ShipMatrix.
- Big online retailers have valuable data on customers, which they can leverage to make shipping more efficient. E-commerce companies could then sell shipping and logistics services to third-party merchants and create a new revenue stream.
- Retailers could also cut down on shipping costs by building out their own shipping capabilities. Amazon has seen revenues from shipping through its Fulfillment By Amazon program rise faster than shipping costs.
- Amazon, Alibaba, and Walmart have so far focused on building out their last-mile delivery and logistics services but are increasingly going after the middle- and first-mile of the shipping chain.
- Amazon has already made major moves across each stage of the shipping journey. It launched same-day delivery service, which it handles through its own fleet of carriers, cutting out any third-party shippers. The company also recently began establishing shipping routes between China and North America.
- Walmart's interest in expanding its transportation and logistics operations is almost purely related to cost-savings. It's begun leasing shipping containers to transport manufactured goods from China and is making greater use of lockers and in-store pickup options to cut down on delivery costs.
- Alibaba, like Amazon, sells its own goods and operates as a third-party marketplace. Alibaba has begun leasing containers on ships, similar to Amazon's Dragon Boat initiative. This means that Alibaba Logistics can now facilitate first-mile shipping for third-party merchants on its marketplace.
The parcel delivery industry — a segment of the shipping sector that deals with the transportation of packages to consumers — is booming thanks to e-commerce growth, and players outside the [...]