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Will Amazon revolutionise the supply chain next?

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2nd Jul 2015
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Amazon plans to transform its logistics service into a profit centre in a bid to revolutionise the existing supply chain and compete with companies such as UPS, according to a new report.

The report entitled “Amazon’s Prime Ambition” published by courier firm ParcelHero claims that the move would save the online retail giant $3 billion per year globally, and £122 million in the UK alone, on third party providers such as Royal Mail.

Amazon attests that its new logistics arm, which was set up in the UK in 2012 as a test-bed for eventual roll-out across the rest of Europe and the US, is simply intended to complement services provided by existing delivery companies. It also claims that the unit is intended to strengthen its strategically key Prime service in order to boost customer loyalty.

But the report alleges that by setting up its own logistics company, the unit could become a lucrative profit rather than cost centre, saving the organisation $5.13 billion annually.

For example, the move would enable the supplier to enhance its Prime service by introducing valuable Sunday and same-day deliveries. Into the longer-term, it would also start being able to deliver all of its goods itself, commencing with weekly groceries and home services.

This scenario would include orders made via the Internet of Things – in the US, customers can currently install a “Dash” system, which enables automated messages to be sent to Amazon if their fridge is running low on milk or their coffee maker is short of beans.

Since March, the vendor has also undertaken trials with Audi to deliver good to customers’ cars and, if successful, the aim is to role the service out across Germany.

At some point in the future, it is suggested that Amazon could even use the new service to deliver goods manufactured on route to customers using 3D printers – it has allegedly already filed a patent to that effect.

Roger Sumner-Rivers, ParcelHero’s founder, said: “We believe that long-term, Amazon’s logistics plans mean everything will one day be delivered through a portal called Amazon, from the web platform you order your items on, right through to the actual production of those items, while on the way to you.”

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