In his recent presentation to shareholders, Amazon CEO Jeff Bezos said he was looking for a fourth “great business” for the company to build – could logistics and shipping be it?
Amazon has a unit devoted to helping it deliver orders quickly – it’s called Amazon Supply Chain Optimization Technologies (SCOT), and it’s recruiting talent to help build out its logistics capabilities.
Amazon explains SCOT as follows:
Every time a customer places an order on Amazon.com, we make a promise to deliver it quickly. Supply Chain Optimization Technologies (SCOT) is the organization behind our ability to make that promise – to get customers what they need, when they need it and at a great price. We use advanced techniques and technologies including machine learning and data science to predict demand, forecast inventory needs and select suppliers.
The Seattle Times covered Jeff Bezos’s recent presentation where he described the four characteristics of great businesses and identified three such businesses at Amazon: “the Amazon Marketplace, where third-parties sell products; Amazon Prime, the $99 a year program that offers two-day shipping at no extra cost; and Amazon Web Services, which rents computing power and storage to businesses.”
Amazon has a pattern of creating services for other business built on its know-how: Fulfillment By Amazon (who would have thought retailers would willingly send inventory to Amazon warehouses?) and AWS (companies like Netflix were able to scale using Amazon’s Web Services), for example.
Amazon has negotiated incredible deals with shipping carriers – and has its own infrastructure as well. There’s room to offer other companies shipping discounts and still have room for profit.
Amazon is using technology to figure out the best way to get a product to a customer and has the delivery mechanism to do it, something other retailers might pay to get access to.