LaaS is here, Amazon is opening its vast delivery network to all businesses

Amazon has announced that it is opening up its massive delivery network for any business to use. That is, the American giant has essentially launched LaaS – Logistics as a Service. Here is everything you need to know.

In Short

• Amazon launches Amazon Supply Chain services (ACSC)
• ASCS to be Amazon’s Logistics as a Service (LaaS) product
• You can now rent Amazon’s logistics network for your business

Amazon is one of the largest companies in the world. It has products like Amazon Web Services (AWS) that provide computing infrastructure to companies as a service. But now, Amazon is expanding into the service sector. The company has now launched a new LaaS – Logistics as a Service – product, called Amazon Supply Chain Services (ASCS). ASCS will allow businesses to use its own supply chain network, for a fee.

Amazon has one of the largest supply chain networks in the world. The company has over 100 cargo aircraft, only beaten by the likes of UPS and FedEx in the cargo space, with a large network when it comes to overseas shipping too. And now, Amazon wants to offer this network to other companies.

This move puts Amazon in direct competition with established logistics groups including UPS, FedEx, and DHL Supply Chain. Shares of FedEx and UPS fell more than 9 per cent each after the announcement, while Amazon's shares rose nearly 1 per cent. DHL shares also witnessed a drop of 7.3 per cent.

AWS but for logistics

You can think of ASCS as something similar to AWS. But instead of a company renting Amazon’s data centres, it rents its logistic network to ship goods.

Amazon Supply Chain Services will allow companies to move, store and deliver goods through Amazon's entire logistics network. That is, you can move raw material, finished goods, and the works through freight, distribution, fulfilment and parcel shipping networks.

The entire network was previously only available for Amazon's own retail operations and its independent selling partners.

Who is Amazon’s ASCS for?

The company states ASCS is aimed at businesses across sectors including retail, healthcare, manufacturing and automotive. Amazon has revealed that its early customers include Procter & Gamble (P&G), 3M, and American Eagle Outfitters.

Amazon claims that the proof of the model for other businesses came from its own selling partners. Since 2006, independent sellers have shipped more than 80 billion units through Fulfilment by Amazon – the shipping service for independent sellers.

How will Amazon’s ASCS work?

Amazon said ASCS is built around three main offerings that can be accessed through a centralised console, and that the network can also fulfil orders placed through platforms that compete with Amazon, including Walmart-run marketplaces, Shein, Shopify and TikTok.

Businesses will get three separate options, Freight, Distribution and Fulfillment, and Parcel Shipping. The three options cover different aspects, ranging from ocean and air shipments, to label creation and shipment tracking.

As per Armstrong & Associates, the global market for third-party logistics services is valued at more than $1.3 trillion. Last year, Amazon became the world's largest third-party logistics company by gross logistics revenue, based on its third-party seller services. Those services accounted for about 24 per cent of Amazon's total revenue last year, with net sales of $172 billion.

- Ends