Chapter 1: The Ice Cream Analogy

Imagine visiting a fast-food restaurant and craving ice cream, only to be told that the ice cream machine is out of order. It's a frustrating scenario that many can relate to, and it often leaves you feeling disappointed. In a moment of frustration, you might declare, "I will create the best ice cream machine ever!" The cashier, unimpressed, might simply respond, "Okay, good luck with that."

Now, imagine you follow through on that ambition and design an incredible ice cream machine. Not only do you succeed, but you also become renowned for serving the finest ice cream in the country. Meanwhile, the restaurant you once relied on for your fix is left wondering how they lost their edge in the market.

This is akin to Amazon's journey a few years back. Initially, they depended heavily on UPS and FedEx for deliveries. However, with a grand vision in mind, they decided to take matters into their own hands, launching their own fleet and acquiring planes for Amazon Air. This strategic pivot not only ensured timely deliveries but also positioned them as the largest delivery service in the United States.

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Chapter 2: Overcoming Obstacles

A key takeaway from Amazon’s story is their refusal to accept limitations. Instead of pushing UPS or FedEx to improve their services, Amazon boldly declared, "We will buy our own planes." While they have substantial resources, many other companies with similar advantages often choose not to disrupt their suppliers. Consider Apple and the chip shortages stemming from the COVID-19 pandemic, or Nvidia’s anticipated shortages related to supply chain issues in China.

When you embark on your own tech venture, perhaps building a product with OpenAI's GPT-4, you might face a similar dilemma. If your customers demand a faster solution, the instinct might not be to create an entirely new model. Instead, it often comes down to vision and execution.

Amazon's ascent as the largest delivery service in the U.S. was not merely a goal; it was a necessity driven by their global e-commerce vision. Their aspiration was to provide everything to everyone as quickly as possible. Any aspect of their service that fell short was swiftly improved. If a hot new product emerged, it needed to be available on Amazon. If customers in certain countries couldn't access Amazon, they knew it was only a matter of time before their logo appeared there. If deliveries weren't quick enough, they would find a way to make them faster.

In Amazon’s eyes, "fast" meant hours rather than days—a notion that likely seemed ambitious to many. Yet, they achieved it, demonstrating that such feats are possible for anyone willing to innovate.

Chapter 3: The Rise of In-House Solutions

It’s no surprise that major tech companies are developing their own artificial intelligence systems. Meta has Llama 2, Google employs Palm 2, and Amazon is utilizing Anthropic’s Claude while also creating "Olympus." Apple has "Ajax," and Microsoft uses Copilot, which is based on OpenAI's GPT. Each company is essentially building its own version of UPS and FedEx, aware that no single entity can dominate the AI B2B sector.

The dynamics shifted when Amazon ceased relying on UPS and FedEx for deliveries. As Amazon grew, it became evident to these logistics giants that their business was at risk. Retailers that once shipped with UPS were now turning to Amazon, given its unmatched buyer traffic. While UPS may continue to handle traditional shipping needs, the long-term customer value from Amazon dwarfs what they would earn from an average business.

In the world of parcel delivery, business-to-business transactions are where the real game lies. Amazon has become both the supplier and consumer in this sector. Thus, the days of UPS and FedEx enjoying a hefty share of the B2B market are likely behind them. While they won't disappear entirely, their dominance has faded, and unless they can adapt, they will be relegated to chasing smaller opportunities.

Chapter 4: The Future of Delivery Services

The business landscape is unforgiving, indifferent to brand loyalty or legacy. If a better option arises, companies must adapt or risk obsolescence. If I were to invest my remaining resources, I would focus on innovations in transportation, as the only way to win back Amazon as a customer may involve ultra-fast delivery solutions—potentially using advanced drone technology for deliveries in five minutes or less.

This perspective on Amazon's market evolution raises important questions. Do you view Amazon's actions as detrimental to UPS and FedEx? Or is this a natural progression in the competitive business environment? What does the future hold for these traditional delivery services? I invite your thoughts in the comments; let’s engage in a discussion.

I'm AL, a business consultant based in Zurich, Switzerland, dedicated to providing value to my readers. Feel free to connect with me across various social media platforms if you're interested in my insights.