4 Way Logistics, Inc. | How SMB’s are Challenging Amazon’s Logistics Empire
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How SMB’s are Challenging Amazon’s Logistics Empire

08 Aug 2017, by Mike Rogers in Blog, Logistics Outsourcing

 

 

Any company that shares a name with one of the world’s largest rivers is bound to be a contender. Amazon’s CEO Jeff Bezos – briefly the world’s richest man – has done everything he can to ensure his company lives up to its lofty moniker. That means breaking new ground constantly behind the scenes, whether it’s using robots in warehouses or looking into airborne drone deliveries. Can small and medium-sized businesses possibly compete with the kind of buying power, networks, and innovations Amazon has at its disposal? Absolutely: in fact, they are already. 

The “Jack of All Trades” Issue

Amazon famously began as an online bookstore, but has since billed itself as the “A-to-Z” ecommerce destination, offering everything from those original novels on through to fresh organic produce, courtesy of the company’s recent acquisition of Whole Foods. That’s a good thing, right? Not always. When a company loses sight of its own roots, it risks overextending its resources, as a growing list of Amazon-branded failures attests. Who could forget the “Fire Phone,” a smartphone option that attempted to capitalize on the Kindle’s success? Well, just about everybody, as it turns out. Much like Google, Amazon has also attempted – and failed – to artlessly clone a number of popular services in recent years, ranging from local deal sites to payment methods, to music delivery services.

Lesson learned: Stick to what you show natural talent in; don’t try to be everything to everybody. SMBs are loyal to their core product(s) and that reflects in customer and brand loyalty along the way. 

The Ethical Speed Issue

Ecommerce-wise, what’s worse than having to wait for something you’ve purchased online? A botched delivery or damaged goods is what typically comes to mind. Even if your delivery goes off without a hitch, however, how would your feelings change if you knew that workers were systematically exploited to get it there? Amazon has attempted to scale up sustainably as it has grown, but ground-level workers haven’t always gotten that memo. As recently as last year, delivery drivers were hauling the ecommerce leader into court over claims they were paid as contractors but expected to work as employees, while Amazon’s warehouse workers made the news for sleeping in roadside tents to make it into work on overly-demanding schedules. The new sweatshop scandal, overworked supply chain employees can irreparably damage a brand through the right news outlets, and Amazon has been walking a thin line for some time. 

Lesson learned: No company should ever feel that it’s big enough to treat the heart of its operation poorly. SMBs experience far lower turnover than the ecommerce giant, and are more likely to stay involved and aware of day-to-day warehouse conditions.

The Over-Promising Issue

Fast shipping and free shipping are two phrases near and dear to a bargain-hunter’s heart, which is why Amazon uses them so heavily. Prime membership, an annual club of sorts that runs roughly $100, gives shoppers free 2-day shipping on everything Amazon itself stocks and sells. The problem is that, in the hands of an enthusiastic public, that’s a staggering amount of packages to move. While third-party logistics carriers are all too happy to step up, what about customers in areas they don’t service well – or at all? Offering varying shipping options becomes a lot more difficult at scale, requiring huge warehouses to interface with more trucks, more procedures, more docks, and more “reverse logistics” in the form of returns. Partnering with gig-economy apps and third party consumer services like Uber to cover the proverbial last mile of delivery has proved problematic at best in terms of professionalism and liability. Amazon’s own logistics services are also garnering infamously bad reviews for their lackadaisical efforts. 

Lesson learned: SMBs understand that customers like to be kept in the loop, and that strict automation often lacks personality and flexibility in solutions. Their smaller size also means that offering customers multiple 3PL carriers, including the USPS, is a more feasible option.

While SMB CEOs might not consistently make the covers of business magazines, they understand that success lies in versatility, a trait which becomes exponentially more elusive at an Amazon-level volume.  As Amazon continues to experience growing pains, they’ll be learning important lessons from the ecommerce leader’s failures, and using them to build up their own success stories. 

Looking for ideas to transform your Logistics into a competitive advantage? Here is a short video showing 3 simple steps that can improve profits and the customer experience. If you prefer, email me at miker@4way.com for a free strategy session.