Providing in-depth insight, data, and analysis of everything digital.

Source: AP

Amazon and the New Age of Delivery

THE EVERYTHING SHIPPER

AMAZON IS INVESTING HEAVILY INTO SHIPPING

FIRST, WHAT IS AMAZON?

Source: Getty

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

Bill

ion

s

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

AND E-COMMERCE IS WHERE ALL THE GROWTH IS

Source: US Census, comScore, BI Intelligence

Forecast: US E-Commerce Sales

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 2days

Within 3-4days

Within 5-7days

Within 1-2weeks

Fast Shipping Not Fast Shipping

AND AMAZON IS NOT IMMUNE TO THOSE COSTS

Source: Amazon

Amazon Shipping Costs

$0

$2

$4

$6

$8

$10

$12

$14

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Bill

ion

s

AMAZON’S DOUBLE-EDGED SWORD

Source: Amazon

Amazon Shipping

Costs

$0

$40

$80

$120

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

20

15

Bill

ion

sAmazon Net Sales

$0

$4

$8

$12

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

20

15

Bill

ion

s

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

Mill

ion

s

Shipping Costs Shipping Revenue

AND IT DID THIS IN TWO WAYS

#1: AMAZON PRIME

0

20

40

60

80

100

Dec

-11

Mar

-12

Jun

-12

Sep

-12

Dec

-12

Mar

-13

Jun

-13

Sep

-13

Dec

-13

Mar

-14

Jun

-14

Sep

-14

Dec

-14

Mar

-15

Jun

-15

Sep

-15

Dec

-15

Mill

ion

s

Source: Piper Jaffray, Morningstar, RBC, CIRP, BI Intelligence

Amazon Prime Members Worldwide

FREE SHIPPING DRIVES PRIME SIGN-UPS

Source: RBC Capital Markets

Primary Reason US Amazon Prime Members Signed Up For Prime

#2: FULFILLMENT BY AMAZON

Source: Amazon

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 MusicalInstruments

Automotive HomeSupplies

Appliances Patio, Lawn

Amazon as seller Third-party seller

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

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

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

Mill

ion

s

Shipping Costs Shipping Revenue

ENTER: DRAGON BOAT

Code Name For Amazon’s Own Global Shipping Service

CROSS-BORDER SHIPPING BY AIR AND SEA

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

DRAGON BOAT IS PART OF A LARGER INITIATIVE

AMAZON DELIVERY DRONES

Source: Amazon

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

AMAZON LOCKERS

Source: Wikipedia Commons

AMAZON IN-STORE PICKUP

Source: Getty

IN-STORE PICKUP GROWING POPULAR

Source: Slice Intelligence

Percentage Of E-Commerce Sales That Are In-Store Pickup, By Retailer (2015)

AMAZON ISN’T THE ONLY RETAILER SHIPPING

PARTNERS SHOULD BE CONCERNED ABOUT …

ALIBABA IS FOLLOWING A SIMILAR TRAJECTION

Source: Alibaba

ALIBABA GMV

Source: iResearch

Alibaba Global Gross Merchandise Volume

$0

$50

$100

$150

0%

20%

40%

60%

Q12013

Q22013

Q32013

Q42013

Q12014

Q22014

Q32014

Q42014

Q12015

Q22015

Q32015

Q42015

$ Billions

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

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

IN THE END, DELIVERY VOLUME WILL

KEEP INCREASING

Year-Over-Year Increase In Holiday Package Shipments, By Carrier (2015)

Source: UPS, FedEx

LEADING TO DELAYS AROUND PEAK SHOPPING

AND RETAILERS WILL PICKUP THE SLACK …

SO, FRIENDS OR FOES?

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