Why Amazon has no interest in the logistics business
The logistics business is a big one for Amazon.
The online retailer’s chief financial officer, Marc Benioff, told investors last month that Amazon could grow its logistics business by $100 billion by 2020.
But the company isn’t interested in building its own logistics operation, as it has with warehouses.
Instead, Amazon’s strategy is to partner with third-party logistics providers like the logistics giant Avis Budgeting.
The partnership, announced last year, is expected to deliver goods from Amazon to the retailer’s warehouses, and Avis is already the largest logistics provider in the country.
The deal could lead to more consolidation of the business, as the third-parties could compete with Amazon for the same space.
Amazon isn’t the only company competing for the business.
Amazon is also working on a similar logistics partnership with freight broker CME Group, which is currently building its logistics operations in Texas and Florida.
CME’s CEO, Jim Cramer, said at a conference in May that Amazon’s decision to partner directly with a logistics provider was an example of Amazon “building the infrastructure” for its own fulfillment network.
“We’re the leader in logistics,” Cramer said at the time.
“So it is not surprising that Amazon would seek to partner to build its own warehouses.”
Cramer added that the company is “not alone” in looking for a partner to help it grow its warehouses.
Citi analysts estimate that Amazon is currently seeking a logistics partner to expand its logistics network.