Why This Matters to Distributors: Amazon is expanding beyond parcel delivery into freight, warehousing, fulfillment and last-mile logistics, giving distributors another supply chain option while increasing competition for traditional carriers, third-party logistics providers, and contract warehouse operators.
Amazon is expanding beyond parcel delivery, positioning its logistics network as a full-service supply chain platform for manufacturers, distributors, retailers, and other businesses.
The company launched Amazon Supply Chain Services (ASCS) on May 6, opening its freight transportation, warehousing, fulfillment, and parcel delivery capabilities to businesses regardless of whether they sell on Amazon’s marketplace. The move commercializes the logistics infrastructure Amazon built to support its own retail operations and extends it to third-party customers.
“Amazon is bringing the infrastructure, intelligence and scale of its supply chain services, proven over decades, to businesses everywhere, much like Amazon Web Services did for cloud computing,” Peter Larsen, vice president of Amazon Supply Chain Services, said in announcing the platform.
The network includes more than 200 U.S. fulfillment centers, more than 80,000 trailers, more than 24,000 intermodal containers and more than 100 aircraft.
Several large companies have already adopted the service. Procter & Gamble is using Amazon’s freight network to move raw materials and finished goods throughout its supply chain, while 3M is using the service to transport products from manufacturing facilities to distribution centers worldwide. Lands’ End is using Amazon’s inventory network to fulfill orders across multiple sales channels, and American Eagle Outfitters is relying on Amazon’s parcel network to deliver online orders.
Amazon expanded the platform again on June 10 by opening its less-than-truckload service to shipments moving anywhere, not just freight destined for Amazon facilities. Previously available only to Amazon selling partners and vendors, the service now allows businesses to ship one to six pallets, or 150 to 15,000 pounds, to third-party warehouses, distribution centers, and retail locations.
The LTL service includes GPS shipment tracking, automated appointment scheduling, electronic proof of delivery, electronic data interchange integrations and a fleet equipped with cargo cameras and door sensors.
Amazon is also continuing to invest heavily in the infrastructure supporting the network.
The company plans to build a 248,687-square-foot robotics-enabled fulfillment center in Georgetown, Texas, according to a state filing. The approximately $48 million project will include robotic storage and sorting systems, cold storage, and order fulfillment operations. Construction is expected to begin in August and finish in July 2027.
The project follows the opening of a $250 million fulfillment and distribution center in Round Rock, Texas, which received a temporary certificate of occupancy in May, and a 62,000-square-foot last-mile delivery station that opened in Brownsville in March.
For distributors, Amazon’s expansion represents more than another parcel delivery option. The company now offers freight transportation, inventory storage, warehousing, fulfillment and final-mile delivery through a single platform, allowing businesses to outsource multiple supply chain functions without using Amazon’s ecommerce marketplace.
The strategy creates another logistics option for distributors evaluating transportation and fulfillment partners, particularly those seeking to consolidate freight, warehousing, and delivery under a single provider.
It also raises strategic questions. Many distributors compete directly with Amazon in categories including industrial supplies, healthcare products, and consumer goods. As Amazon expands its logistics services, distributors will need to balance the operational advantages of its network against the risks of relying on a company that also competes in many of their end markets.
Amazon’s continued investment in fulfillment centers, freight services and logistics infrastructure suggests the company is building a long-term business that extends well beyond ecommerce. For distributors, which means Amazon is increasingly competing not only with FedEx, UPS, and DHL, but also with third-party logistics providers, contract warehouse operators and other companies that manage transportation and fulfillment.
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