Amazon was founded in 1994, has a market value of $500 billion and is in the race along with Apple to become the first $ 1 trillion dollar company.
Uber was founded in 2009 with the goal to connect drivers and passengers and it made low-cost transportation possible with a brilliant idea and just a simple application for smartphones. By now it has an estimated value of $69 billion.
An online-retailer and a taxi-app wouldn’t necessarily be considered as competitors but this case is unusual. How are they competing? What do these two giants have in common? They both entered the logistics market within the last few years.
One might assume that given the size difference between Amazon and Uber, Uber’s chances to dominate in this competition are slim but there’s more to it if we take a closer look. While Jeff Bezos' monstrosity recorded 27% net sales growth in 2016, Uber, on the other hand, achieved a significant + 400%. This just shows that the battle to conquer the logistics market is expected to be fierce and intense.
Within the last mile delivery, both companies use freelance drivers to deliver goods and are focusing on utilizing their own resources. Since 2015, Amazon, through Amazon Flex, has managed to reduce costs, become more independent of its carrier partners like UPS and FedEx and is able to provide a better service, faster delivery to its customers.
Also in 2015, Uber launched Uber Rush and since then has managed to increase its earnings by combining its traditional passenger transport service system with its new package delivery system. It has since then also started a cooperation with Walmart for home delivery services.
Last mile delivery plays an important role in the strategy of both of the giants but long haul trucking is attractive to them as well. In the U.S. this is a rather fragmented sector with obvious shortcomings. Out of the 1.2 million U.S. American truck companies almost, 90% operate 6 trucks or less and this results in inefficiency, approximately ⅓ of trucks drive without a shipment.
In this sector, the two companies seem to have a different approach on how to gain market share. Uber developed Uber Freight and it is designed specifically to connect truck drivers with available shipments. Amazon, on the other hand, bought a truck fleet with thousands of truck trailers in 2015.
Business Insider, though, suspects Amazon to build a similar “Uber for trucking” app but this has not been confirmed.
Not only are Amazon and Uber entering the trucking industry, but they will most probably use autonomous trucks in the future. Uber acquired Otto 2016 and has since been testing self-driving vehicles and now operate an autonomous truck fleet in Arizona.
It seems that Amazon is not satisfied with only being present in ground transportation, they want more. In 2015, the Chinese division of Amazon bought a maritime transportation license and entered the ocean freight industry. Currently, they are only shipping goods of Amazon’s partners but chances are they will open their services to third parties as well.
And this isn’t everything: In 2016, when launching Amazon Prime Air, Jeff Bezos rented 40 Boeing jets for 5 years and instantly became the world's fourth largest air freight operator. These jets are flying between the 10 U.S. airports and support the company’s 48-hour delivery service.
The last sector where competition can be expected to become more intense is drone delivery. While Gartner is skeptical about the uprising of this sector within the next few years, Amazon has been actively examining the potentials drones have. Several patents with various drone-concepts have been filed, the latest being self-destructing drones. Once regulations regarding drone delivery will be clarified, Amazon will likely be one of the pioneers of the industry.
What has Uber done so far with drones? Not much. They were only used during a single marketing campaign during which he delivered ice creams to his potential customers.
Where will all this lead? What impact will Amazon and Uber have in the logistics industry? This infographic summarizes the previously illustrated history of the two giants in the sector and depicts two possible outcomes. Take a look yourself!