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Amazon: The Uber of Trucking?

It’s that time of year again.

As we approach the holiday season and online shopping reaches its annual high, talk inevitably shifts to the spectacle of Amazon delivering packages by drones.

Just yesterday, the news was that Amazon has been beaten to the punch by 7-Eleven, which made its first regular drone deliveries to customers in the United States.

In partnership with drone startup Flirtey, 7-Eleven delivered snacks, food and medicine by drone throughout November in a trial program in Reno, Nevada.

Meanwhile, Amazon only made its first commercial drone delivery to a customer earlier this month.

But despite the usual hype around flying robots delivering your shipment of toilet paper, the real action is elsewhere.

Amazon Gets Into Trucking

Earlier this week, the Wall Street Journal reported that Amazon is developing an app that would let it schedule and track truck shipments of its products. This effort is the online retail platform’s next big move in its bid to become a major player in the commercial shipping and freight industries.

According to the WSJ’s sources at Amazon, the company’s next move (naturally) would be to make this “Uber for trucking” app available to non-Amazon shippers in the B2B freight market.

As we’ve written previously, trucking in the U.S. is a very fragmented industry. It’s ripe for platform disruption.

However, the challenge as always is how to get to scale. Amazon doesn’t have that problem. By starting with its own core business, Amazon can easily fill the demand for a network of truckers. There’s also already a large informal network of 1099 truckers that Amazon can tap into. After it’s scaled up internally, it can then easily add external demand into the mix.

Other startups working in this space, like New York startup Transfix or Uber’s self-driving truck acquisition Otto, don’t have the same luxury. Both have to figure out how to grow both supply and demand at the same time.

Why would Amazon be interested in opening its logistics expertise up to competitors? For the exact same reason it opened up Amazon Web Services. Logistics and shipping are a huge cost center for Amazon. Getting greater scale by opening up an Uber for trucking to external shippers would improve the efficiency and unit economics of Amazon’s own logistics. It would also enable it to amortize the cost of shipping by making money off of this core competency, just as it has with AWS.

The ultimate goal for Amazon would be to create a network of self-driving trucks, eliminating the cost of human labor altogether, as it already has in many parts of its warehouses.

While drone delivery is still likely on the horizon, Amazon’s Uber for trucks, and eventually self-driving trucks, could have a much bigger impact much sooner.

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