Another day, another Bezos cover you can’t unsee. I’d argue that today’s Bloomberg Businessweek cover is the best so far. Sure, we had our fun with Romance Novel Bezos and we shook our heads at Hindu Bezos, but this depiction of the Amazon CEO soaring through the air with glee of a lifelong aerospace geek will bring smiles to faces everywhere.
Well, everywhere except, perhaps, inside the offices of FedEx. Bloomberg’s cover and feature story illustrate the massive, expensive, and unprecedented delivery infrastructure Amazon is building — one that could put other couriers, like FedEx, out of business.
Earlier this month, the company debuted Amazon One, the first branded plane in what will eventually become a fleet of 40 leased by Amazon. That force will supplement Amazon’s network of 4,000 branded truck trailers and its Amazon Flex delivery system. Amazon leverages that delivery power on top of UPS and FedEx, which the company still relies on heavily…for now.
Amazon tends to dodge questions about whether it will make a business out of its delivery network. Bezos says the added infrastructure is meant to supplement partnerships with existing couriers and provide better delivery service to its customers.
“Really, it’s all about building core capacity for our Prime service for customers,” Dave Clark, Amazon’s senior vice president of worldwide operations, said at a press preview of Amazon One.
Then again, the company first built out a massive server operation to support the data demands of Amazon.com. As an experiment, Bezos decided to let other companies use its servers too. That became Amazon Web Services — the leader in cloud computing —which is on track to generate $10 billion in annual revenue.
The general consensus among investors, analysts, and other companies is, don’t take competition from Amazon lightly. FedEx and UPS publically tout the strength of their partnerships with Amazon and say they aren’t concerned about competition. But Bloomberg’s interview with Robert Lieb, a professor of supply chain management at Northeastern University, tells a different story:
“When Amazon was talking about same-day delivery, people said, ‘Who cares? We don’t want that business anyway,’ ” Lieb says. But once Amazon began leasing planes, they started to worry. “Amazon’s market entry strategy has pretty much been ‘I’m going to come in and I’m going to beat you to death with low prices,’ ” he says. “If Amazon follows that tactic, they would destabilize this industry rather quickly.”
