The “Amazon Effect”

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 Staying Competitive in the 3PL Industry

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3PL’s have certainly taken notice of Amazon’s expansion into the world of logistics. Many have expressed concern, which is understandable given the company’s reputation, innovation, and consistent growth.

But what does this really mean for the 3PL industry? Robert and Kristin Lieb of DC Velocity, interviewed 25 CEOs of some of the world’s largest 3PL’s to get their take on Amazon’s potential impact. According to these CEOs, the factor that has had the largest impact thus far is their high-speed delivery process.[1] As a result of these rapid delivery programs, customer-service expectations have significantly changed and although speed has always been a priority in 3PL, this is pushing it to a whole new level. Some have deemed it part of the “Amazon Effect” on the 3PL industry.

Amazon is certainly shaking things up with their logistics capabilities. Subsequently, 3PLs are being challenged to rethink their services as well as their technology. Adrian Gonzalez, president of Adelante SCM, maintains that Amazon’s move into the 3PL segment will “force traditional 3PL providers to ‘flip their model’ and effectively become IT specialists that work in the logistics business.”[2]

So how can 3PL’s prepare? As Michael McKinney of A.M. Transport put it, “You can be informed, proactive and involved or reactive and let someone else decide your fate. Either way you can’t avoid it.” Besides continuing to improve customer service, another recurring theme was the development and implementation of a solid omnichannel strategy. When 3PLs take advantage of technology and utilize it in a way that creates a seamless and pleasant experience for customers, it sets them apart and decreases the chance that they will be signficantly affected by the “Amazon Effect”.

[1] Lieb, R. & Lieb, K. (2015) Is Amazon a 3PL? Retrieved from: http://www.dcvelocity.com/articles/20150706-is-amazon-a-3pl/

[2] Gonzalez, A. (2016) Amazon’s 3PL encroachment to force traditional providers to overemphasize IT, consultant says. Retrieved from: http://www.dcvelocity.com/articles/20160630-amazons-3pl-encroachment-to-force-traditional-providers-to-overemphasize-it-consultant-says/

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