business news in context, analysis with attitude

The Puget Sound Business Journal has a piece about a new analysis by investment firm Sanford C. Bernstein postulating that Amazon’s “budding shipping service won’t be able to compete with FedEx Corp. and United Parcel Service Inc. over the long-term … unless driverless technology takes off.”

According to the story, “Amazon’s shipping service — ‘Shipping with Amazon’ (SWA) — aims to deliver packages from its merchants' warehouses directly to customers, the Wall Street Journal reported earlier this month. The Seattle-based retailer plans to eventually extend the delivery service to businesses that don’t sell goods on its online marketplace by luring new customers with lower shipping rates than UPS, FedEx, and the U.S. Postal Service.”

However, the Bernstein analysis says that FedEx and UPS shouldn’t lose any sleep: “Traditional shippers just have too large a network to disrupt. But there may be a way for Amazon to break through. Standard and Poor’s Global Ratings, sees SWA as a way for Amazon to rein in its own shipping costs by selling empty space on the trucks that it is already using to meet its own transportation needs.” In addition, and perhaps more importantly, “One way Amazon could gain the upper hand is by exploiting driverless truck technology, S&P said. While UPS and FedEx have plenty of resources, their ability to shift to a driverless business model could be hobbled by union contracts and technological shifts.”
KC's View:
A lot of this analysis seems fair. Yes, FedEx and UPS would seem to have a commanding lead in the shipping business that would be hard for Amazon to dent. And yes, the best way for Amazon to disrupt that advantage would be through some sort of transformative insight or technology. And yes, adherence to legacy methods of doing business also can be a hindrance to traditional companies.

On the other hand, isn’t this always the case?

It reminds me of the old Dan Patrick line: “He's listed as day to day, but, then again, aren't we all?”