Amazon Delivery Push Is a Gift to Automakers

(Bloomberg Opinion) -- Amazon.com Inc. is usually cast as a predator that's going to topple business models. But here's a role that's less talked about: valued customer.

The e-commerce giant this week announced an order for 20,000 Mercedes-Benz Sprinter vans, making it the world's largest customer for the vehicle. It's a key vindication of Daimler AG's $500 million investment in a new state-of-the-art Sprinter plant in North Charleston, South Carolina that's set to employ 1,300 people by the end of 2020.

Amazon's car order is part of its plan to develop a network of delivery entrepreneurs by providing small businesses with discounted vehicles, fuel, insurance, uniforms and technology. The commission for 20,000 vehicles is an increase from the original order, “thanks to the tremendous response” for the new delivery program, Dave Clark, Amazon's senior vice president of worldwide operations, said in the press release. Getting this program off the ground will require navigating a tight labor market where truck drivers are in particularly short supply. But whatever form Amazon's logistics operations ultimately take, it's going to need trucks and vans, making this a very fruitful partnership opportunity for Mercedes-Benz and other automakers.

There's been much debate over the threat Amazon's patchwork logistics investments — which also include cargo planes, warehouses and a freight-forwarding registration — pose to United Parcel Service Inc. and FedEx Corp. I tend to fall in the middle: I don't think Amazon actually wants to be FedEx 2.0, but it's increasingly becoming a competitor whose services are apt to have a special appeal to third-party vendors that sell on its websites. Those now extend beyond retailers to industrial-parts and medical-supplies companies and potentially pharmaceutical companies as well.

At the very least, Amazon's logistics experiments seem likely to drive ongoing heavy spending at the two incumbents as they adapt to new standards of customer experience, pricing, timing and automation. One angle I hadn't given much thought to before now, though, was the impact this delivery push will have on automakers.

It's not just Amazon that's ramping up its logistics investments. After ending a partnership with Uber Technologies Inc., Walmart Inc. is starting a crowd-sourced pilot program to help it reach its goal of offering fresh-food delivery to 40 percent of U.S. households by the end of 2018. It will be similar to Amazon's program with a third party recruiting and managing independent drivers, who I imagine will need cars. Notably, a Ford Motor Co. executive this week credited e-commerce for an uptick in sales of commercial vehicles such as the Super Duty pickup and Transit van. That contributed to a 15 percent increase in deliveries to fleet buyers in August for Ford.

Rev your engines.

To contact the editor responsible for this story: Beth Williams at bewilliams@bloomberg.net

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Brooke Sutherland is a Bloomberg Opinion columnist covering deals and industrial companies. She previously wrote an M&A column for Bloomberg News.

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