Now that it dominates online retail, Amazon is expanding its reach into logistics which includes obtaining a NVOCC license for moving goods via ocean freight. All of this is to further cement its title as “Earth’s Most Customer-Centric Company.” While all eyes are focused on the company’s US activities, its European operations are equally impressive, growing and potentially connecting Asia.
Germany – The Focal Point
Germany appears to be the focal point for Amazon’s European aspirations. Recently Amazon.de expanded its free delivery service to the Czech Republic, Denmark, Sweden, Finland, Hungary and Slovakia. It has also been reported that the company has taken delivery share from DHL in various German cities with its own delivery service. In fact, Credit Suisse analysts estimate that Amazon accounts for about 30 percent of DHL parcel volumes and up to a quarter of its revenue. At the same time though, Amazon is a big customer of DHL’s in Germany and beyond. A sticky situation to be in one of the largest small parcel providers.
In addition, Amazon has expanded its Dash Button to Germany, Austria and the UK. The devices allow consumers to order certain products with the push of a button. It is also launching its Dash Replenishment service in the three countries in partnership with several appliance manufacturers such as Bosch, Siemens, Whirlpool and Samsung. Whenever a customer’s stock runs low, customers can automatically reorder items.
Fulfillment
It’s not all about delivery. Fulfillment by Amazon (FBA) allows sellers to use Amazon’s fulfillment centers and Amazon to pick, pack and ship orders to customers. The company’s Pan-European FBA program further allows shippers to ship to customers in other European Union countries. A big plus in the B2C market, Amazon’s FBA service has also expanded to its Amazon Business, a B2B service.
According to Amazon, Amazon Business plans to eventually offer a service for calculating Europe’s VAT, or value-added tax, and include it in product pricing and customer invoices. It’s letting sellers on Germany’s Amazon Business pre-enroll now for the service. VAT is a system of adding tax for each stage of production of a product, with the tax rate usually set based on the location of the customer.
A word of caution though, by allowing Amazon to collect commercial invoices on behalf of customers, Amazon will be in a position to view well-performing products and then perhaps produce them themselves or use the same producer as their customer.
European Air Network
Last year, as Amazon was trialing air cargo in the US, it was doing the same in Europe. According to Air Cargo News, Amazon is still using the same process in Europe which calls on Doncaster Sheffield Airport in the UK, Kassel in Germany and Wroclaw in Poland. Through its forwarder, DB Schenker, it has chartered aircraft from ASL Airlines France with service about five days a week on a possible rolling basis.
Fulfillment facilities are located close to each airport with a new facility due to open in Doncaster next year and two facilities to open in Wroclaw as well.
Poland seems to be an important piece to Amazon’s European network. Since 2014, the company has invested PLN 3 billion ( About $716 million USD) on three facilities and two offices. In comparison of investments elsewhere, this may not seem much but Amazon has been rumored to have moved some German fulfillment operations to Poland in response to recurring labor strikes and increases in fulfillment costs in Germany. In fact they are already encouraging Amazon FBA sellers to move stocks to Poland by increasing delivery and storage charges in and through their German warehouses.
Stay in the Know
Amazon and other entrants into the logistics market are fascinating to read about but at the same time, it is important to stay abreast of such trends as these logistics players have the potential to disrupt the supply chain. The logistics market is changing rapidly – competition, technology and more. Stay in the know by subscribing to our free newsletter.
