Amazon just ran a familiar playbook. Build internal infrastructure for your own use, and once it's working, sell it to everyone else.
That's how Amazon Web Services - the cloud platform launched in 2006 to revamp Amazon's own IT - became the world's biggest cloud business. Now Amazon is doing the same thing with its supply chain.
Amazon launched "Amazon Supply Chain Services" on Monday, opening its fleet of more than 100 cargo planes and a sprawling network of warehouses and sorting hubs to outside companies.
The service handles freight, fulfillment, parcel shipping, and stock forecasting. Customers across retail, healthcare, and manufacturing can plug in, with delivery windows running two to five days.
Procter & Gamble, 3M, Lands' End, and American Eagle Outfitters have already signed on, per Amazon. Companies can use the service across their websites, social channels, and physical stores.
UPS shares fell about 9.8% in midday Monday trading, while FedEx dropped about 8.7%. Amazon shares barely moved.
That's the market making a clear call. The two companies losing pricing power are UPS and FedEx, and the company gaining a new revenue line is Amazon - though investors weren't surprised enough to bid the stock higher.
For investors who own UPS or FedEx, the news isn't just a bad day. Amazon's logistics network already handles enough volume to compete with UPS and FedEx on price and delivery speed, and the question now is what that does to delivery pricing across the whole industry.
The cloud playbook took about a decade to fully reshape company IT. Logistics could move faster, since the customer pool is broader and the value pitch (lower cost, faster delivery) is easier to demonstrate quickly.
For two decades, Amazon has spent on warehouses, planes, vans, and software. That spending built the largest private logistics network in the country.
What now: Today, that network became a profit center. Three things to watch from here:
Logistics has been a quiet duopoly for decades. UPS and FedEx have set prices, and most U.S. shippers had little choice but to pay them.
Amazon entering the market with size and scale opens room for price pressure across the industry. Even shippers that don't switch to Amazon could see better rates from UPS and FedEx as those two fight to keep customers.
That dynamic is good for businesses that ship a lot of goods - and for the companies that pass shipping savings on to shoppers.
Amazon spent more than a decade building this network. Today it became a revenue line.