Amazon reported its Q2 2017 results yesterday. Revenues increased 25 percent to $38 billion in the quarter compared to Q2 2016, but profits fell by 77 percent as the company continues to invest heavily in its various businesses, including its logistics and fulfillment network. Shipping expenses increased 36 percent in the quarter to over $4.5 billion.
“Amazon just proved—again—that it can do whatever the hell it wants,” is the title of a Quartz article written yesterday by Alison Griswold. “Do investors like it when Amazon beats estimates? Sure. Are they going to lose faith when it misses? Nope. Amazon can do whatever it wants. Lackluster earnings have yet to change that,” she concludes.
“Why is this?” I was asked on Twitter. Because we let it.
Which raises another question: what can potentially stop or bring down Amazon? Here are some possibilities:
- An Enron-like accounting scandal
- Antitrust action by the government
- Walmart, UPS, Facebook, and Netflix joining forces
- A crippling, long-term cyberattack
- A massive asteroid hitting the Earth
Which option is the most likely? Cast your vote or post a comment with your perspective.
Moving on, here’s the rest of this week’s supply chain and logistics news:
- Freight-Booking Startup Convoy Raises $62 Million (WSJ – sub. req’d)
- Shyp is reducing headcount and suspending all operations outside of SF (TechCrunch)
- Amazon launches ‘The Hub’, parcel delivery lockers for apartment buildings (TechCrunch)
- Tesco launches nationwide same-day delivery (Logistics Manager)
- Next Leap for Robots: Picking Out and Boxing Your Online Order (WSJ – sub. req’d)
- Norway Takes Lead in Race to Build Autonomous Cargo Ships (WSJ – sub. req’d)
- J.B. Hunt Transport Services, Inc. Expands E-Commerce Delivery Platform with the Acquisition of Special Logistics Dedicated, LLC
- ATA Opposes Efforts to Delay ELD Deadline
- AscendTMS To Integrate With FourKites
- Ryder Reports Second Quarter 2017 Results
- UPS Reports 2Q EPS Of $1.58 As Revenue Grows Across All Segments
In the quest to transform and disrupt the logistics industry, you will have some winners and you will have a lot more losers. In the “currently winning” category is Convoy, a technology-based freight broker that raised $62 million in a funding round led by Silicon Valley startup accelerator Y Combinator, along with investments from funds managed by Bill Gates and Barry Diller. As reported in the Wall Street Journal, the money “will go toward expanding nationally and adding more shippers and trucking companies to its platform.”
I’ll just repeat what I’ve said many times before: These startups are forcing entrenched players in the logistics industry to “up their game” with regards to technology. Their success or failure will ultimately depend on whether shippers and carriers take them seriously, and whether they provide a better value proposition than the status quo.
Which brings us to Shyp, the latest entrant in the “currently losing” category. As reported by TechCrunch:
Shyp, the on-demand shipping service launched in 2013, has announced in a blog post that they are withdrawing from all but one city and “reducing headcount at headquarters” in an effort to “prove their business model and set Shyp up for long-term success.”
As of today [July 20, 2017], the company will suspend operations in Chicago, Los Angeles and New York, and only operate in San Francisco, where the company is based.
Shipping — how hard can it be? That question has crossed the minds of many entrepreneurs and investors throughout the years, leading them to launch companies in this space, only to find out the hard way that it ain’t that easy.
And with that, I’m out of time and space. Have a happy weekend!
Song of the Week: “Feel It Still” by Portugal. The Man