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The Everything Shipper: Amazon and the new age of delivery by BI Intelligence

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Retailers are looking to reduce their reliance on delivery partners and handle more of their own transportation and logistics themselves. The retailer paving the way into shipping is Amazon.

In this slide deck, BI Intelligence looks at what Amazon is doing in the shipping space and projects what the future of shipping will look like.

Published in: Business
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The Everything Shipper: Amazon and the new age of delivery by BI Intelligence

  1. 1. Providing in-depth insight, data, and analysis of everything digital. BI Intelligence Source: AP Amazon and the New Age of Delivery THE EVERYTHING SHIPPER
  2. 2. AMAZON IS INVESTING HEAVILY INTO SHIPPING
  3. 3. FIRST, WHAT IS AMAZON? Source: Getty
  4. 4. STILL THE FASTEST-GROWING MAJOR RETAILER Source: Amazon Amazon Net Sales $0 $40 $80 $120 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Billions
  5. 5. AMAZON IS US E-COMMERCE Source: Wall Street analysts Amazon’s Share Of US E-Commerce Market 0% 10% 20% 30% 40% 2008 2009 2010 2011 2012 2013 2014 2015
  6. 6. AND E-COMMERCE IS WHERE ALL THE GROWTH IS Source: US Census, comScore, BI Intelligence Forecast: US E-Commerce Sales
  7. 7. BUT E-COMMERCE OPERATIONS ARE EXPENSIVE Source: Deloitte What US Consumers Consider “Fast Shipping” (2015) 0% 20% 40% 60% 80% 100% Same-day Next day Within 2 days Within 3-4 days Within 5-7 days Within 1-2 weeks Fast Shipping Not Fast Shipping
  8. 8. AND AMAZON IS NOT IMMUNE TO THOSE COSTS Source: Amazon Amazon Shipping Costs $0 $5 $10 $15 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Billions
  9. 9. AMAZON’S DOUBLE-EDGED SWORD Source: Amazon Amazon Shipping Costs $0 $40 $80 $120 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Billions Amazon Net Sales $0 $4 $8 $12 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Billions
  10. 10. SO AMAZON HAD TO OFFSET THOSE COSTS Source: Amazon Amazon Shipping Costs And Shipping Revenue $0 $5 $10 $15 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Millions Shipping Costs Shipping Revenue
  11. 11. AND IT DID THIS IN TWO WAYS
  12. 12. #1: AMAZON PRIME 0 20 40 60 80 100 déc-11 mars-12 juin-12 sept-12 déc-12 mars-13 juin-13 sept-13 déc-13 mars-14 juin-14 sept-14 déc-14 mars-15 juin-15 sept-15 déc-15 Millions Source: Piper Jaffray, Morningstar, RBC, CIRP, BI Intelligence Amazon Prime Members Worldwide
  13. 13. FREE SHIPPING DRIVES PRIME SIGN-UPS Source: RBC Capital Markets Primary Reason US Amazon Prime Members Signed Up For Prime
  14. 14. #2: FULFILLMENT BY AMAZON Source: Amazon
  15. 15. THIRD-PARTY SELLERS CORE TO AMAZON Source: RW Baird Percentage Of Amazon Orders, By Seller 83% 79% 81% 86% 87% 89% 90% 0% 50% 100% Overall Pet Supplies Musical Instruments Automotive Home Supplies Appliances Patio, Lawn Amazon as seller Third-party seller
  16. 16. BRANDS FEEL STRONG-ARMED BY AMAZON Source: Wall Street analysts Amazon’s Share Of US E-Commerce Market 0% 10% 20% 30% 40% 2008 2009 2010 2011 2012 2013 2014 2015
  17. 17. AMAZON’S COSTS NOW UNDER CONTROL Source: Amazon Amazon: Growth Of Shipping Costs vs. Growth Of Shipping Revenue 0% 20% 40% 60% 2008 2009 2010 2011 2012 2013 2014 2015 Cost Growth Revenue Growth
  18. 18. BUT AMAZON WON’T STOP THERE Source: Amazon Amazon Shipping Costs And Shipping Revenue $0 $5 $10 $15 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Millions Shipping Costs Shipping Revenue
  19. 19. ENTER: DRAGON BOAT Code Name For Amazon’s Own Global Shipping Service
  20. 20. CROSS-BORDER SHIPPING BY AIR AND SEA
  21. 21. AMAZON NOW HAS FREIGHT AIRCRAFT Number Of Freight Aircraft Planes In Operation, By Carrier 20 240 370 0 100 200 300 400 Amazon UPS FedEx March 2016 Source: Company filings, BI Intelligence
  22. 22. DRAGON BOAT IS PART OF A LARGER INITIATIVE
  23. 23. AMAZON DELIVERY DRONES Source: Amazon
  24. 24. Source: US Census, comScore, BI Intelligence Delivery Fee That Consumers Pay For A Small Package 5lb package delivered within 10 miles in the US BRINGING A NEW ERA OF FAST, CHEAP SHIPPING
  25. 25. AMAZON LOCKERS Source: Wikipedia Commons
  26. 26. AMAZON IN-STORE PICKUP Source: Getty
  27. 27. IN-STORE PICKUP GROWING POPULAR Source: Slice Intelligence Percentage Of E-Commerce Sales That Are In-Store Pickup, By Retailer (2015)
  28. 28. AMAZON ISN’T THE ONLY RETAILER SHIPPING PARTNERS SHOULD BE CONCERNED ABOUT …
  29. 29. ALIBABA IS FOLLOWING A SIMILAR TRAJECTION Source: Alibaba
  30. 30. ALIBABA GMV Source: iResearch Alibaba Global Gross Merchandise Volume $0 $50 $100 $150 0% 20% 40% 60% Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 $ Billions
  31. 31. ALIBABA’S SHARE OF CHINA E-COMMERCE Source: iResearch Share of China B2C E-Commerce Market 61,4% Others Jumei Yixun Amazon Dangdang Yihaodian Gome Vip Suning JD Tmall
  32. 32. CHINA E-COMMERCE MARKET STRUCTURE Source: iResearch China E-Commerce Sales, By Type Of Marketplace 25,3% 34,6% 40,4% 45,8% 51,4% 56,1% 59,6% 0% 50% 100% 2011 2012 2013 2014 2015 2016 2017 B2C C2C
  33. 33. IN THE END, DELIVERY VOLUME WILL KEEP INCREASING Year-Over-Year Increase In Holiday Package Shipments, By Carrier (2015) Source: UPS, FedEx
  34. 34. LEADING TO DELAYS AROUND PEAK SHOPPING
  35. 35. AND RETAILERS WILL PICKUP THE SLACK … SO, FRIENDS OR FOES?
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