Amazon Prime Dominance Creates New Startup Opportunities – TechCrunch

E-commerce is one of the strengths of the economy; Online sales in the United States have almost doubled in five years and now exceed $ 500 billion. Unsurprisingly, Amazon has taken a disproportionate share of wealth, engulfing nearly 50% of the market share, pushing its competitors out of business and strengthening its position as one of the most profitable companies in the world.

As part of its comprehensive transformation of the e-commerce landscape, Amazon has made delivery in two days the new industry standard – a standard that most potential competitors can not meet alone without investing millions of dollars in infrastructure or partnering with their greatest competitive threat. Fortunately for traders, new logistics startups are being created to help them compete with Amazon.

Choking of Amazon

In the form of clbadic coopetition, Amazon now allows more than one million merchants to sell via Amazon Marketplace. It offers these merchants two days of shipping for a one-time package – a package so cheap that no shipping provider can compete. Amazon doubles its advanced distribution network by investing $ 700 million in Rivian, an electric trucking company; increase its fleet of more than 50 delivery aircraft; and the installation of 20,000 Mercedes-Benz delivery vans.

A two-day delivery is so convincing, often doubling sales, that many merchants are becoming more and more dependent on Amazon, despite the obvious risks of partnership with the behemoth. This in itself is stimulating startups that help merchants to thrive on Amazon. Amazon forces merchants who work with them to compete with other brands, including the company's own private label collection, which it promotes aggressively. Amazon is also pressuring merchants to offer their lowest prices on Amazon, despite the fact that Amazon absorbs a significant percentage of revenue. Even in this case, Amazon could suddenly eject the merchants from its platform without notice.

Once merchants have sold on Amazon, they are often unable to diversify to other platforms with higher margins and increased control, as they now depend on Amazon's unbeatable shipping price. . This pressure is making the merchants more and more nervous as Amazon squeezes them from all sides. Merchants are desperate for solutions to help them get out of Amazon's choking. A new batch of startups takes the opportunity to provide this.

Aggregate delivery routes

Transportation accounts for more than 75% of delivery costs. Merchants can save millions by pooling their shipping, trucking and delivery costs on the last mile. Traditionally, this pooling was done by expensive freight brokers on paper and pen. Today, companies like Flexport, which just raised $ 1 billion, and Convoy, which was worth just over $ 1 billion, can more effectively match shippers and carriers to combine packages and reduce costs.

Last-mile delivery companies such as ShipBob, which recently closed a $ 40 million investment cycle, are also beginning to offer two-day shipping solutions similar to Amazon's. Deliv * takes an even more aggressive approach by offering retailers a same-day delivery service via its courier services. By combining volume, these startups allow merchants to save more than 20% by negotiating larger volume discounts with carriers and optimizing routes.

Distributed storage

To deliver within two days, merchants must have access to warehouses located close to their customers. While companies like Walmart and Amazon may be able to invest billions of dollars in multiple US-based distribution centers, while small-scale retailers and distributors will be able to leverage startups such as Flexe and Darkstore to provide on-demand storage in the United States. Pooled warehouses spread across the country. Rather than keeping everything in a central warehouse thousands of miles away, merchants can use artificial intelligence to forecast consumer demand and ship their inventory to nearby distribution centers. These start-up companies will become increasingly important as retailers look to go beyond two-day shipping and offer a one-day shipping and even the same day.

Robotics and Automation

Despite high initial costs, robotics offers a cheaper, long-term alternative to manual labor in many distribution centers. RightHand Robotics, which has just reached $ 23 million, uses a robotic arm to facilitate the selection of objects in warehouses. Each arm can operate at the same speed as an experienced packer, while working 24 hours a day. Other startups use automation to reduce delivery costs on the last mile at the same time. using various methods, ranging from autonomous cars to delivery drones. Starship Technologies, for example, is currently building a fleet of small autonomous robots that can be delivered locally. Although individual traders can not buy robotic arms, they can take advantage of new logistics companies to reduce costs and improve efficiency with these new automation techniques.

Dependent on convenience, consumers continue to demand that their goods arrive faster and faster. Amazon is the king of comfort and constantly pushes the bar higher – or faster in this case. Merchants have trouble keeping up. Fortunately for them, a new generation of logistics startups is helping them to compete. By creating solutions for the logistics infrastructure of the future, these startups help merchants stay in the race against Amazon.

* Denotes Trinity Holding Company