With an eye on China, Amazon reportedly forging global delivery business

By Daphne Howland | February 10, 2016

Dive Brief:

• Amazon appears to be moving forward with goals to forge a worldwide delivery system to move goods from places like China and India to the U.S. and Europe, according to areport from Bloomberg based in part on leaked documents.
• Bloomberg refers to a report, apparently called “Dragon Boat,” that was delivered to Amazon executives in 2013 that described a bold project to provide storage, fulfillment, shipping, and last-mile delivery for marketplace sellers based in Asia and Southeast Asia.
• Such a move would put Amazon in competition with last-mile shippers, but, more importantly, in competition with Alibaba and U.S. based retailers of all stripes that import Chinese goods.

Dive Insight:

Amazon’s registration as an ocean freighter forwarder was first noticed by freight logistics company Flexport, which published a blog post about it in mid-January. 

An ocean freight forwarder organizes shipments from suppliers to far-flung receivers, which Flexport calls a $350 billion market. An entry into the ocean freight forwarding market could be significant because it could allow Chinese factories a more direct path to American consumers, Flexport CEO Ryan Petersen noted.

Indeed, Amazon’s own report describes the ability for “one click-ship for seamless international trade and shipping,” and says, ‘“Sellers will no longer book with DHL, UPS or Fedex but will book directly with Amazon,” according to Bloomberg’s description of the report. “

The move could be a boon to Chinese sellers interested in reaching the American market as well as Amazon’s other markets globally, especially considering the expectation that Amazon would keep costs down, Petersen told Retail Dive.

"I don't think people realize how threatening this is for their U.S.-based merchants, who are making money selling goods from Chinese factories," he told Retail Dive. 

But Petersen said that many Marketplace sellers would be unlikely to give Amazon, a rival retailer, the kind of information that an ocean freight company would be privy to, while any full-blown development of Amazon’s ocean freight forwarding capabilities is likely still months, if not years, away.

Still, the discovery of documents by Bloomberg affirms that Amazon does indeed have ambitions in this area, in contrast to the way Amazon CFO Brian Olsavsky recently downplayed the news that it had registered as an ocean freight forwarder and had increased its own delivery capacity with trucks and cargo plane leases.

While some may think that Amazon has Alibaba in its sights with such a move, Petersen believes it may be an answer to Wish, a mobile e-commerce platform that has built much of its fortunes so far on bringing Chinese sellers to customers in the U.S. and elsewhere.

Taking on the ocean freight market “to create a streamlined, vertically-integrated system for Chinese factories to sell directly through Amazon would be a classic Bezos response to Wish’s threat,” Petersen said, predicting that “Amazon’s ocean freight offering could be a huge hit for Chinese merchants.”