Identify an example of a strategic partnership and describe the alliance.

Answer the
following questions based on what you discover:
For this example I would like to look at partnership between Amazon and UPS & FedEx

Amazon has partnered with various shipping carriers over the years to facilitate its
package deliveries, including UPS (United Parcel Service), USPS (United States Postal
Service), and FedEx. The specific dates and details of these partnerships have evolved
over time:

1. Amazon started evolving as the logistics company as competitor to UPS and FedEx.
In 2009, shipping and fulfillment costs amounted to 15.6 percent of net sales. By
2021, that share had risen to 32.3 percent so it put pressure on amazon to grow its
own logistics divison

1. UPS (United Parcel Service):

 oEarly Partnership: Amazon began partnering with UPS in the late 1990s
to handle some of its package deliveries. This partnership helped Amazon
expand its delivery capabilities beyond its own initial infrastructure.
o Expanding Relationship: Over the years, Amazon's relationship with
UPS has evolved and expanded to include various services, including
package delivery, logistics, and more. The exact details of this partnership
have changed over time as Amazon has developed its own delivery
network.
o Post Amazon Challenge: UPS is creating innovative products and
partnering with other companies to offer a suite of solutions to serve small,
medium and large e-tailers around the world
2. FedEx:
o Initial Relationship: Amazon has worked with FedEx on and off over the
years. Initially, FedEx was one of Amazon's delivery partners, but there
have been periods of strain and discontinuation of certain services,
particularly for ground deliveries.
o Recent Developments: In 2019, Amazon officially announced that it
would no longer use FedEx Ground for its Prime deliveries. However,
Amazon has continued to use FedEx for other services, and the exact
nature of their partnership has evolved.
o Post Amazon breakup: FedEx is focused on serving the addressable
$550 billion global transportation and logistics market. FedEx has already
built out the network and capacity to serve thousands of retailers in the e-
commerce space.It is partnering with major retailers to support their
growth through our best-in-class portfolio of innovative solutions, such
as FedEx Extra Hours, the launch of seven-day deliveries
via FedEx Ground and our FedEx retail convenience network

It's important to note that Amazon's logistics and delivery strategy has evolved
significantly over the years. Amazon has invested heavily in building its own delivery
network, including Amazon Prime, Amazon Logistics, and a fleet of delivery vans. This
has allowed Amazon to become increasingly independent in its package deliveries while
still relying on partnerships with carriers like UPS, USPS, and FedEx for various aspects
of its delivery operations. The exact terms and scope of these partnerships may change
over time as Amazon continues to innovate in the logistics and e-commerce space.

How did collaboration and competition change over time based on strategic
goals, resources, and organizational control?

• On Amazon Side:
o Growing cost of shipping
o The catalyst is "Amazon Logistics", the company’s delivery arm,
expanding its operations amid a slowdown in e-commerce volumes that
has left it with excess capacity. One way to fill it, the theory goes, is to
begin insourcing volumes that have traditionally been handled by UPS
 o Gap between Amazon’s fulfillment and logistics capacity has narrowed in
recent years
o "Buy With Prime", which allows selected merchants to offer Amazon’s
ubiquitous Prime offering, including deliveries, through their online stores.
Another is Amazon’s service begun in May 2022 to enable last-mile
deliveries for brick-and-mortar retailers
o Postal Service introduced pricing based on a shipment’s dimensions, a
practice that often results in higher rates for parcels that fall outside the
carrier’s stated dimensional requirements. Amazon, along with other
Postal Service users, pulled business from the agency once that policy
took effect.

• UPS
o Amazon relies heavily on UPS for long-haul, typically two-day deliveries of
goods normally not stocked in Amazon’s warehouses while UPS enjoys
the margins
o Amazon does not serve everywhere e.g. Billing, Montana hence relies on
UPS
o Volume of packages from Amazon put pressure on UPS's capacity and
operations, prompting adjustments in pricing to better manage the influx of
packages
o UPS has chased growth in segments outside of e-commerce in order to
boost its profit margins. It began to focus on attracting more profitable
deliveries from healthcare companies and smaller shippers.
Is (or was) the partnership explorative or exploitative? How do you know?

This was explorative as Amazon setup the logistics organization and armed them with
objectives to find opportunities of cost savings on logistics while continuing to focus and
expand on their core business.

• UPS often shared proprietary routing data with Amazon executives, and gave them tours
of its operations to sell them on its business, this allowed Amazon to define its own
operations and process
• Amazon hired dozens of logistics executives to help it map out its own delivery strategy.
• Learning from its shipping partners, as well as its own shipping operations, Amazon
squeezes costs by focusing on high-density markets and dotting urban markets with
delivery stations that allow it to reduce its reliance on other shipping companies

References:

https://www.washingtonpost.com/technology/2020/11/27/amazon-shipping-competitive-threat/
https://www.businessinsider.com/amazon-timeline-history-fedex-ups-logistics-trucking-planes-vans-
2019-12
https://www.statista.com/chart/17207/amazon-shipping-and-fulfillment-costs/
https://www.freightwaves.com/news/amazon-and-ups-is-the-great-split-finally-here
https://www.retaildive.com/news/ups-amazon-reduce-delivery-volume-revenue-ties-
2023/644199/#:~:text=Amazon%20is%20shifting%20away%20from,to%20boost%20its%20profit%20ma
rgins.
https://www.cnn.com/interactive/2018/10/business/amazon-history-timeline/index.html