Amazon Launches Amazon Freight, a New Freight Brokerage Platform

Just a few weeks after we covered the expansion of Amazon Shipping, Amazon is shaking up the freight brokerage industry with the launch of Amazon Freight, a new digital freight brokerage offering substantial discounts to market rates. FreightWaves broke the news.

We do not yet know what portion of trucks available for booking on the service are Amazon owned versus owned by others in Amazon’s logistics partner network.

Given its scale, we think Amazon is already one of the largest freight operations in the US purely through the management of its own supply chain. Amazon ships goods coming in via ocean freightliners as well as between its fulfillment centers using both its fleet of trucks and trailers and others’ as needed.

The launch of Amazon Freight follows a pattern we’ve seen from Amazon over the years. First, Amazon invests in its own infrastructure as a way of creating a sustainable competitive advantage. (For example, Amazon’s own fulfillment centers/FBA infrastructure and AWS.) Then, having invested large sums into these systems, Amazon opens them up for third parties to pay to use, both in order to recoup costs and over time perhaps even earn some margin — in the process continuing to invest in the systems, leading to an even greater competitive advantage.

A larger Amazon Freight system will also likely offer Amazon some insulation against the price volatility of using third party freight services, particularly around the holidays when Amazon volume spikes. Now, Amazon could let third parties fund a larger fleet throughout the year, and then potentially just take over more of that capacity itself in November and December.

Per Freightwaves, Amazon’s rates are 25 to 33% lower than typical contract rates offered on routes out of Connecticut, Maryland, New Jersey, New York, and Pennsylvania. So, it appears Amazon is willing to run this business at little to no margin or at a loss in order to gain market share and ramp up the flywheel on its freight marketplace.

Ultimately, it was just a matter of time until Amazon opened this up, and we generally expect Amazon to become a meaningful marketplace for third party freight capacity in North America over the coming years.

TJI Research Media Citations This Week

Here’s a roundup of selected TJI Research citations from across the media world for the week ending April 26, 2019:

  • Amazon adds condiments to fast-growing private label lineup by Krishna Thakker of Grocery Dive

Amazon Launches Private Label Salsas, Oils, Vinegars, and Mustards

As Amazon continues to expand its private label food and beverage efforts, it has for the first time launched private label salsas, vinegars, and mustards, we are seeing.

Four salsa products have launched under the Solimo brand. They are:

In addition, four oils and vinegar products have launched under Amazon’s Happy Belly brand:

Finally, Amazon has also launched three mustard products under its Happy Belly brand as well:

Following our findings in recent weeks that Amazon was launching private label milk, dairy, energy drinks, and coconut water products under its Happy Belly and Solimo brands, we have been observing signals that Amazon is planning to further invest in and expand its private label food and beverage offerings in the form of new job posts focused on these roles.

Amazon has been growing its private label food & beverage offerings under a portfolio of brands, including Happy Belly, Solimo, AmazonFresh, and Wickedly Prime. The selection offered within these brands has significantly increased over the last several months.

Amazon now sells “Our Brand” items under 130+ private label brands and 400+ Amazon Exclusive brands. For more on Amazon’s private label efforts, subscribe to the TJI Amazon Briefing and check out the TJI Amazon Brand Database.

24 Amazon Exclusive “Our Brands” Added to TJI Amazon Brand Database

We’ve added 24 Amazon Exclusive “Our Brands” to the TJI Amazon Brand Database. The new brands we’re seeing are across electronics, home goods, pet goods, and industrial supplies.

The new brands are:

  1. Asencia – LED light bulbs
  2. Asimom – Bluetooth speakers
  3. Ayclif – household goods (UK)
  4. Berter – braces and socks
  5. Best Earth Naturals – dietary supplements
  6. Ergove – pet food supplements
  7. Fulighture – LED light bulbs (UK)
  8. GloRiastar – bathroom mirrors
  9. Halo by Darby Angell – kitchenware
  10. Inspired Essentials – pet food storage and accessories
  11. Kundu – outdoor pools
  12. Marare – headphones
  13. Meidong – speakers
  14. Merryfeel – linens and towels
  15. Mighty Rock – speakers
  16. Movsou – headphones
  17. Multiform – dietary supplements
  18. Plants for Pets – air plants and succulents
  19. Portage Bay – ceiling fans
  20. Pro Focus – sporting goods
  21. Smart Fido – pet food supplements
  22. SMPL – phone accessories
  23. SuperHandy – industrial appliances
  24. Szsago – Bluetooth speakers

To track Amazon’s ongoing private label and exclusive brand efforts, Subscribe to the TJI Amazon Briefing.

Amazon Begins Marketing PillPack to Prime Members

It’s been about 7 months since Amazon’s $753 million acquisition of PillPack closed in September. Since then, new developments have been relatively quiet on the customer-facing front, though Amazon has been applying for more per-fulfillment-facility state licenses. “Right now our focus is on learning from them and innovating with them on how best to meet customer needs over time,” Amazon CFO Brian Olsavsky said in October.

However, today, we’re seeing reports from users for the first time that Amazon is beginning to proactively market PillPack to its broader customer base. Jay Hancock tweets that he’s received (apparently unsolicited) email from Amazon cross-promoting PillPack’s pharmaceutical delivery service.

“Meet PillPack, a new member of the Amazon family,” the email reads. “Your medication sorted by the dose and delivered every month. Our service and shipping are free – you only pay for your medication.” We do not yet know how many people have received this email marketing message, or how Amazon may be targeting early recipients.

Amazon has also added a new PillPack store page on Amazon.com.

Amazon has said that it has over 100 million Prime customers worldwide, and likely needs to significantly ramp up the number of PillPack fulfillment facilities in operation to better compete with CVS Caremark, Optum, and Express Scripts. Based on this email, it appears that Amazon is beginning to turn on the firehose of potential customers in PillPack’s direction. As Amazon increases its pharmaceutical capacity, and shortens delivery times via the many logistics options available in its Prime Now last mile delivery networks, Amazon should be able to offer rapid delivery for not just medicine but also many types of medical products, from diagnostic tools to medicines and treatments.

Because a core use case for PillPack is better management of chronic conditions, rush delivery may not be as crucial for customers who take multiple medications on an ongoing basis. Thus, PillPack will likely just be a part, but an important part, of a suite of Amazon health care products and services in the coming years.

In addition to prescription medications, Amazon is also taking steps to possibly offer insurance. Amazon has begun the process of applying to sell health and life insurance in India. Just last month, we noted Amazon had obtained its corporate agent license in India. It is also rumored to be exploring the insurance markets in the USUK, and other countries as well. While Amazon does not offer consumer insurance directly today, it has consumer data that theoretically could help it to assess risk and lower fraud rates.

We’ll continue tracking Amazon’s PillPack efforts. For more, subscribe to the TJI Amazon Briefing, or check out our TJI Amazon Healthcare Overview.

8 Amazon Exclusive “Our Brands” Added to TJI Amazon Brand Database

We’ve added 8 Amazon Exclusive “Our Brands” to the TJI Amazon Brand Database. The new brands we’re seeing are across furniture, health and personal care, furniture, electronics, and apparel.

The new brands are:

  1. Chicreat – furniture (UK)
  2. CityLife – men’s underwear (UK)
  3. Kexin – electronics accessories (UK)
  4. Kirikura – skin creams
  5. Tishavi – jewelry
  6. Venue – women’s activewear (UK)
  7. Viamod – women’s intimate apparel (UK)
  8. Vita Essentials – dietary supplements

To track Amazon’s ongoing private label and exclusive brand efforts, Subscribe to the TJI Amazon Briefing.