In the past year or so, Amazon has made a big push to position itself as a leading purveyor of web services, with the idea being that all of the computing infrastructure it has built up for its own needs can be rented out over the web to third parties. The recent brouhaha with Alexaholic notwithstanding, this strategy has done a lot to help disabuse people of the notion that the company is just a lumbering, "web 1.0" dinosaur, whose business model is not all that different from the brick-and-mortar retailers that it's sought to displace. Today, the New York Times has an interesting story about a new service from the company that will allow a third-party retailer (such as companies that sell through eBay) to use Amazon's physical distribution infrastructure to fulfill orders. Before, this was only open to retailers which sold their goods through Amazon, but now it can be used by people that sell on any site. Basically, the third party will ship their goods to Amazon, to be stored in Amazon's warehouse. At that point, Amazon will take care of storage, packaging, managing deliveries and handling returns. Although this will be an added cost to those retailers (because they will have to pay to ship the good to Amazon), Amazon hopes it will save them money by removing a lot of other headaches from the order fulfillment process. The thinking behind the service is basically the same as with its web services: the company has built up this big infrastructure for its own needs, so why not rent it out to anyone? Still, despite all of the hype about its burgeoning services business, it remains a small part of the overall picture for the company. The company recently reported excellent earnings, but all of that was from its traditional business. And while the company has been early to market with some of its computing-on-demand products, you have to assume that similar offerings are on the way from Microsoft and Google, which are investing heavily in massive data power plants. In a way, it's order fulfillment service might have brighter products, if only because none of its obvious competitors have built up a similar infrastructure.
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