Our Service Offerings & Thought Leadership team are working closely with the University Of Bath and the students of the MSc in Operations, Logistics and Supply Chain management to investigate the trends driving changes and the common ways organisations are tackling them. This month we are looking at Travel and Transport and how the COVID-19 crisis poses opportunities for some businesses to reshape and redirect operations.
Following a 37% increase in net sales due to a significant surge in demand over the Coronavirus pandemic, Amazon has made a significant investment into sustainable transportation specialists Rivian to produce 100,000 custom-built electrified delivery vans by 2030. This substantial investment stems from Amazon’s pledge to operate at net-carbon zero by 2040 and predicts that approximately 10,000 of the new vans will be on the road by as early as 2022.
A Van of the People
After failing to find a suitable pre-existing electric commercial vehicle, Amazon decided to develop their own by investing an undisclosed amount into EV manufacturer Rivian to design and manufacture a completely bespoke delivery van.
The new delivery vehicle is kitted out with plenty of specialised technology such as 360-degree cameras, state-of-the-art internal sensors to prevent carrying load damages and Alexa integration which provides navigation and weather information to the driver. Amazon hopes these innovations will make their ‘last-mile delivery’ operations quicker, more sustainable, and overall, more efficient for both the driver and the customer.
This significant sustainability investment follows a contemporary strategy similar to businesses like McDonalds3 and John Lewis & Partners who recently introduced their plans for sustainable transportation operations through alternatively fuelled vehicles (AFVs).
Amazon’s Twofold Blow to SMEs
However, while the COVID-19 crisis poses opportunities for some businesses to reshape and redirect their operations, for the majority, it is a time of extreme commercial and operational challenges and survival against some of the most difficult market conditions in living memory. Consequently, this creates a subliminal problem for SMEs that are struggling to weather the Coronavirus storm.
Amazon’s quarterly financial reports show they have benefited greatly from physical retail outlets being temporarily closed across the world since they were able to remain ‘open for business’ and meet the demand that physical shopping environments lost. Amazon’s competitive advantage, therefore, becomes twofold since not only has Amazon satisfied the demand from the physical shopping environments, but they have invested some of their above-normal profits into improving the sustainability, capacity, and performance of their logistics operations. This further widens the pre-existing market power and competitiveness asymmetry experienced by SMEs with major e-commerce marketplaces like Amazon.
However, the opportunities created by coronavirus to restructure and redefine operations are not just confined to major online retailers. Despite the increasing challenge of competitiveness between SMEs and Amazon, SMEs may also benefit from Amazon’s new fleet of delivery vehicles by collaborating with the e-commerce global leader and ‘piggybacking’ off their large investment. This could take the form of using Amazon‘s immense online presence and superior logistics infrastructure as a platform for consumers to access and buy the SME’s products. This would benefit the SME twofold due to an increased degree of consumer exposure to the product and taking advantage of Amazon’s vast, reliable, and now sustainable last-mile delivery infrastructure. Amazon has without doubt capitalised from the pandemic, and in this case, investing in a sustainable future.
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