Page 3 - Logistics News June 2017

Thought Leadership

The “Amazon Effect”

and your supply chain

Courtesy Ryder USA

The way we shop has changed with how fast our fi ngertips can press the checkout button. We live
in a time when people would much rather shop online from the comfort of their home than go to a
brick-and-mortar store. Furthermore, technology advancements over the past 20 years created what
we have come to know as the “now economy.” It is because of these changes that today’s consumers
are digitally savvier, less patient, and have near infi nite options available to them.

FOR MANY, at least in the US, it’s rare to go a Understanding the Macroeconomics of the
week and not receive a package at their door. “Amazon Effect”
As consumers in the major developed markets, In looking at how the “Amazon Eff ect” is
we’ve gone from waiting 7-10 days for an order to changing not just retail, but also the supply chain
sometimes less than two hours. Now, we order industry, we must fi rst look at the economic trends.
everything from groceries for that night’s dinner Total retail sales in the U.S. grew year-over-year at
to a fi nal addition for a child’s science fair project. 3.8% in 2016. During that same time, e-commerce
Simply, it’s the “now economy” driven by the sales grew 15.1%. Online orders still account for
“Amazon Eff ect.” But it’s causing challenges across only about 8.1%3 of all retail sales, but with growth
the board. disparity like the one in 2016, it’s easy to see a time
While demand has increased on retailers, it when that portion will be much larger. The fact is,
has skyrocketed exponentially for supply chains. most of that growth is being driven by just one
Getting that box to a customer’s doorstep is far company.
more complex than it was fi ve years ago, and that According to Slice Intelligence, Amazon
complexity is growing at a more rapid pace. To accounted for 53% of all ecommerce growth in
keep pace with the e-commerce phenomenon 2016. During the 2016 US holiday season, the fi rm
supply chain managers are forced to adjust noted Amazon had almost 37% market share. To
strategies so they won’t lose loyal customers – or give some perspective, in the US market, Best Buy
even worse, their business. was second with just under 4%. Moreover, Amazon

2 June 2017 | Logistics News