In 1997, a failing bookstore was listed on the Nasdaq in an IPO that valued an unremarkable $438 million.
Amazon, this failing bookstore, has quickly grown into one of the most powerful centers of commerce in the world. It is now worth $460 billion.
Now they sell everything from books, to movies, to clothes, to furniture. For centuries, families and companies have made fortunes simply providing transport for other people’s goods. Amazon has decided to optimize their profits by getting into their own freight shipping.
What does this seemingly insignificant shift mean?
Freight Shipping vs. Parcel Handling
It might seem insignificant to talk about Amazon making a move in the freight world. They’re just moving goods around right?
It’s not as simple as that. This process takes place behind the scenes, but it is vital to the success of global trade.
As individuals, we understand the world of parcel shipping. You can ship a package to your mom across the world. You hire a company to handle shipping your package entirely from beginning to end.
When loads are too big then a shipping company like FedEx can’t handle it. That’s where freight shipping comes in. In the world of freights, several companies are going to have contact with the merchandise on its journey across the world.
A company that is used to organize and connect all the different shipping service that will move the freight is called a load board. No company, not even Amazon, has enough trucks, ships, and planes to move all of their own merchandise without using a freight service.
Amazon is now beginning the process of controlling their own freight shipping by making all the connections themselves.
Why Choose Freight Shipping?
Well, one simple answer is profit.
Amazon has a license now that allows them to sell freight. There is a lot of money to be made selling freight.
Amazon saw that they were paying for a service they could have a hand in. Afterall, that is ultimately how Amazon grew to be so successful. They saw where the money was and adjusted.
Amazon has been very quick to adopt new business models, ideas, and technologies to optimize their profits.
Amazon choosing to invest in freight shipping was really just the next step in efficiency. They can make so much money buying freight and handling the shipping and selling of it. As an e-commerce store, it’s somewhat surprising they haven’t made this move sooner.
Before, Amazon was relying on all third-party brands to deliver their products to Amazon distribution centers. Businesses that are smaller than the mega-business Amazon are going to be more inefficient.
It’s About Time
Amazon’s choice to take a more active role in the freight shipping business just makes sense.
While some companies focus on strict profit increase and marketing hacks to increase brand name awareness, Amazon is all about cutting costs and increasing efficiency. That has been their mode of operation since the beginning.
Adding freight shipping has only made Amazon more efficient. These smart innovations make them the cheapest retailer in the world!