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Here’s Where Logistics is Headed and Why Amazon is Unstoppable

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Amazon is the mightiest of e-commerce players right now, and a lot of that has to do with its first-rate—and fast—logistics.

In a panel on “Logistics 2020: Shipping Makes or Breaks Retail,” at the Cowen and Company Future of the Consumer Conference in New York earlier this month, talk centered on what Amazon is doing, drones, and more of what Amazon is doing.

Immediacy has become king in retail and no company has yet figured out how to deliver it better than Amazon.

“At the peak shipping season, we’ve seen Amazon lease in as much aircraft, as much ground support, as much Uber-type deliveries as they can get,” Helane Becker, Cowen managing director of institutional research, said on a panel. “We’re seeing a shift away from Amazon using FedEx or UPS and using other companies…I think that’s why they’re investing so heavily in air and ground and logistics and warehouse space.”

Amazon appears to be charging ahead in retail—and in uber-fast drone delivery—but Walmart, not wanting to be left behind in the race, has been making every effort (including the latest talks about a bid to buy Bonobos), to advance its e-commerce positioning, and so far, it’s the only company close to catching up with Amazon.

“The sleeper, in my opinion, is Walmart,” Tulinda Larsen, CEO and founder of Skylark Drone Research, said. “Walmart has so many more customers where their distribution centers and their stores are, so much more than Amazon, so if they start to do drones, which they are quietly doing, that would be a big disrupter.”

Amazon has been toying with and testing drone delivery in recent years, and in one such test delivery in Europe, the time from click to door by drone was just 13 minutes, Larsen said.

“Drones, literally—well autonomous vehicles in general—are the biggest sea change any of us will experience in our lifetime. It’s going to make just fundamental change in logistics,” Larsen said. In 18 months, there will be one million drones registered, which would be four times the number of registered manned aircraft, she said.

The thing about drones isn’t just the sea change they’ll bring about for logistics, it’s also the cost savings. As Larsen explained, last-mile delivery (getting goods from fulfillment center to final destination) can cost companies between $5 and $10 per package.

“You use a drone and it’s less than $1,” Larsen said.

Drones, however, could face their own disruptor.

“There is the potential for 3-D printing and that community to really disrupt this [drones],” Drew McElroy, co-founder and CEO of Transfix, a network of truck drivers shipping full truckload freight across the U.S. “If you imagine a world where 3-D printing is really that ubiquitous, it’s really going to change logistics completely again.”

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