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Amazon Doubles Down on Cargo Planes, Enters Pre-Packaged Meal Delivery

By Anthony Taylor - May 11, 2016

When you're the size of Amazon, your business growth strategy overlaps with multiple areas, sectors and industries.

As big companies (like Amazon/Google etc) get bigger and bigger, they may start entering all sorts of different markets and begin disrupting incumbents in those markets (forcing them to adapt their own strategies to deal with these threats and new entrants).

Recently Amazon decided to put some investment into cargo planes to gain more control of their supply chain, and less reliance on FedEx, UPS and the postal service. Not only does this move mean less direct business for the aforementioned companies (significant'y less), it could be an even bigger threat if they decide to further enter those markets.

The leasing of those planes served as a signal to the market that Amazon is committed to entering these new markets.

The signal serves two purposes in their strategy development:

  1. It serves as a signal to new competitors that are "thinking" of doing the same thing that they should not because Amazon has committed to this investment and are going to see it though. (Like a raise in Poker)
  2. It also could serve as a signal to those other businesses that they are ready to enter this market as a new competitor and that they are here to stay. (So fight or get out of the way)

Another business strategy development was their entry to the pre-packaged meal delivery space. This development is still relatively new, but it makes sense from a strategy perspective to build on their logistics and shipping network core competencies. We'll see how they are able to manage products with a lower shelf time than their other products.

In the grand scheme of things, the lunch delivery service is small potatoes (pun intended) compared to leasing container planes and taking greater control of their supply chain. We'll see how UPS and Fed-ex adapt their strategic plans and business strategies to deal with this new and powerful contender.

Will they work in partnership or will they bow out of certain markets and get deeper in others?

When looking at your organization's business strategy, ask yourself what affects do your competitors plans have on your own? What signals are coming from the market place that might indicate what your competitors are doing (or thinking of doing)?


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