Amazon is a logistics beast - A detailed teardown

Gain data scale through demand-side integration

Amazon’s approach to logistics is a masterclass in balancing vertical integration vs openness.

The more asset-as-a-service scales, the larger the ecosystem using Amazon’s logistics infrastructure and the greater the data capture for Amazon to constantly improve its prediction models

Gain asset scale through supply-side integration

This virtuous cycle constantly strengthens Amazon’s logistics play.

Amazon’s logistics play follows a common playbook that we’ve seen in other parts of Amazon’s business:

Leverage supply-side scale to open out asset-as-a-service to ecosystem partners

Amazon demonstrates that platforms don’t have to be asset-light, they just have to be strategic about asset ownership. Amazon increases asset ownership were such assets increase ecosystem dependance, and opens itself at other parts of the value chain where it needs third parties to bring in niche capabilities to complement its own.

Amazon’s logistics playbook involves two mutually reinforcing flywheels: an asset infrastructure flywheel (Increase asset base and offer as-a-service) and a data-driven predictions flywheel (Gather data and improve predictions).

Leverage data across the ecosystem to constantly improve prediction models