Logistics has quickly risen as a centerpiece business strategy for many companies, including big-box players such as Walmart and Amazon, which spent over $40 billion (with a ‘B’) on fulfillment in 2019.
This has naturally created a sphere of influence that stretches far and wide, including to small and mid-sized businesses (SMB) who find themselves caught in the wake and influence of big-box players.
Until now it has been difficult to quantifiably say just how much influence big players have on SMB executives. But thanks to uShip’s 2020 SMB Shipping Strategy Report, the industry now has an answer.
When it comes to big-box influence, 1 in 4 SMB decision-makers say the logistics strategies of Amazon and Walmart are influencing how they think about logistics.
Digging in a bit further, 42 percent of SMB decision makers with over $500 million in annual revenue say those same two big-box players’ logistics strategies are influencing how they think about shipping.
Meanwhile, 27 percent of those same SMB decision makers say the logistics strategies of Amazon and Walmart are influencing how their customers think about shipping.
So, what does this all mean?
It means that the race toward fast and free delivery is creating an underlying tension for SMBs and mid-market businesses. They simply don’t have deep pockets to bankroll such aggressive logistics strategies.
For example, cloud platform Amazon Web Services generated nearly 69 percent of Amazon’s 2019 $3.88 billion operating income that was able to support the $2 billion it spent on free 1-day shipping for Prime members, part of the $40.23 billion in total fulfillment costs in 2019.
Walmart, in turn, began its own free 1-day shipping in select markets last May, while Target pushed to offer multiple same-day fulfillment options last year as well.
Meanwhile, SMBs watch from the sidelines.
Should that be the case? At uShip, we think not. We believe that innovative technology solutions shouldn’t be limited to the industry’s major players. See how our In-Home Delivery option empowers sellers of oversized goods with a comprehensive suite of tools that ultimately give you a competitive advantage.