Amazon working to gain wider reach through 3rd party logistics players

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Looks like Amazon has changed its plan to grow its logistics system. The end goal for logistics is still growth, but the how of this plan has been changed. The online marketplace has developed a whole new platform that’s specifically meant to onboard third-party logistics players and staffing agencies that will power the Amazon delivery systems. The cost of delivery will be optimised and in turn obtain a greater reach in return.

Amazon Transport Services (ATS) will run the platform logistics.amazon.in. ATS will screen all third-party logistics companies applying. A separate logistics marketplace like this already exists in other countries where Amazon functions. Amazon in USA, UK, Japan, Canada and Mexico provides logistic partner companies its technology.

The shift in Amazon’s logistics expansion plan

Before the festive season began, we heard that Amazon was looking at building logistics division through more fulfilment centres. Now, the etailer is looking at growing its logistics with third party power.

An Amazon India spokesperson said, “Logistics.amazon.in has been live for a few months now.”

According to experts, new partners, in last mile delivery is especially essential to meet demand on time.

The Amazon spokesperson added, “We partner with more than 160 service partners delivering across 250 Tier II & III locations across the country. There are more than 100 Amazon delivery stations and we partner with many staffing agencies to hire the needed manpower for these locations. We are in the initial phase of migrating our existing partners while onboarding new partners onto the platform.”

Other external carrier partners with Amazon include India Post, FedEx, DHL and Blue Dart.

The spokesperson stated, “Having a combination allows us to ensure large coverage and great customer service.”

Using a marketplace model for logistics

In the US, Amazon provides a minimum guaranteed volume that makes sure the third party players receive a fixed income. Following the marketplace model is advantageous in a way. It offers a flexible network and enables maximum efficiency at a low cost.

Amazon’s international rival Alibaba is backed by Cainiao which works in a similar manner where third-parties are used to meet logistic requirements for orders on Alibaba.

Manish Saigal, the managing director at Alvarez and Marsal India, a consultancy firm, said that a special marketplace with third-party logistics providers offers flexibility.

Saigal sated, The marketplace can take advantage of a small local player to serve orders in areas where they do not have the capacity. This player would not have been onboarded and partnered without the marketplace. It also gives them the benefit of dynamic pricing.”

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