Sep 10, 2020

What is "The Amazon Effect"?

Supply Chain
Amazon Effect
Matilda Pilkington
3 min
Prime delivery vans in a line against the sky
In this article, Supply Chain Digital investigates how “The Amazon Effect" has impacted the world of supply chain and manufacturing...

“The Amazon Effect” is the impact that the business has had on the world since its creation in 1994. This can range from its impact on traditional brick and mortar business, to the impact it has had on the shopping trends and expectations of customers worldwide. 

In this article, Supply Chain Digital investigates how “The Amazon Effect" has impacted the landscape of supply chain and manufacturing in terms of customers, supply chains, and technology.

On Customers

Due to the always-available and constantly cheap prices that Amazon is able to offer, customer’s expectations when it comes to delivery have changed. A few years ago, no one would think twice about waiting for a few days/weeks for something that they ordered online. Now, with Amazon even offering same day delivery in some territories, customers expect the same level of efficiency when interacting with other suppliers. 

This can be a hard pace for smaller companies to keep up with and is causing similar issues with larger suppliers. The effect has even gone as far as to reduce physical shop traffic, which has been reaffirmed by the global pandemic. It is easier for a consumer to stay at home and order a product to arrive the next day for convenience. The increasing demand at a smaller price means that customers are increasingly impatient, and sometimes will choose products of a lower quality, if it means they can get it faster. 

On Supply Chain

As supply chains in their most basic level are responsible for the delivery of goods from A to B, Amazon has had an effect on them too. With the increased demand from customers, supply chains globally are having to develop and adapt to keep up with these high-volume requests. The use of 3 and 4PL’s are increasing as their networks and resources are able to rival those of Amazon and remain competitive.

As a result of this increased demand, supply chains are having to focus on efficiency and end-to-end traceability. (To learn more about end-to-end traceability, sign up to our exclusive webinar hosted for HERE Technologies and Sigfox) Only with a focus on the areas to increase efficiency and reduced costs, can companies hope to compete with giants such as Amazon.

On Technology

Amazon is at the forefront of the technology revolution when it comes to supply chains. One example of this is the focus on pursuing patents relating to drone technology. This ranges from responsive drones to airborne fulfillment centres

They have also invested heavily in AI e-commerce tools, such as those created to detect trends and potential recommendation fluctuations. Even investing in simple chatbot AI can play a huge part in staying in the game. The reach of amazon’s influence in terms of technology can be seen across the supply chain world, with global organisations increasing investment to stay competitive. 

Overall, “The Amazon Effect” can be seen throughout the supply chain world and has impacts across the rest of the consumer life cycle. They are a key player leading the way in defining the direction that e-commerce and logistics are evolving. 

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Jul 22, 2021

Uber Freight to Acquire Transplace in $2.2bn Deal

2 min
Uber Freight’s acquisition of Transplace will supercharge parent Uber’s move into logistics and supply chain

Uber Freight is to acquire logistics technology and solutions provider Transplace in a deal worth $2.25bn. 

The company will pay up to $750m in common stock and the remainder in cash to TPG Capital, Transplace’s private equity owner, pending regulatory approval and closing conditions. 

“This is a significant step forward, not just for Uber Freight but for the entire logistics ecosystem,” said Lior Ron, Head of Uber Freight, and former founder of the Uber-owned trucking start-up Otto.

Uber’s Big Play for Supply Chain

Transplace is one of the world's largest managed transportation and logistics networks, with 62,000 unique users on its platform and $11bn in freight under management. It offers truck brokerage and other capacity solutions, end-to-end visibility on cross border shipments, and a suite of digital solutions and consultancy services. 

The purchase is the latest move by parent company Uber, which launched as a San Francisco cab-hailing app in 2011, to diversify its offering and create new revenue streams in all transport segments.

Transplace said the takeover comes amid a period of “accelerated transformation in logistics”, where globalisation, shipping and transport disruption, and widespread volatility are colliding. 

Uber Freight plans to integrate the Transplace network into its own platform, which connects shippers and carriers in a dashboard that mirroring the intuitive experience found in its consumer vehicle booking and food ordering services. 

“This is an opportunity to bring together complementary best-in-class technology solutions and operational excellence from two premier companies to create an industry-first shipper-to-carrier platform that will transform shippers’ entire supply chains, delivering operational resilience and reducing costs at a time when it matters most,” said Ron. 

Frank McGuigan, CEO of Transplace, said the resulting merger will offer enhanced efficiency and transparency for shippers, and benefits of scale for carriers. “All in all, we expect to significantly reduce shipper and carrier empty miles to the benefit of highway and road infrastructures and the environment,” he added. 

History of Uber Freight

Uber Freight was established in 2017 and separated into its own business unit the following year. In 2019 the company had expanded across the entire continental US, established a headquarters in Chicago. Later that year it launched its first international division in Europe, initially from a regional foothold in the Nertherlands, and later moving into Germany. 

The logistics spinoff attracted a $500m investment from New York-based Greenbriar Equity Group in October 2020, and launched a new shipping platform for companies of all sizes in May, partly in response to a driver shortage in Canada.

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