"Amateurs talk about tactics but professionals study logistics." Robert H. Barrow, USMC, Commandant of the US Marine Corps, 1980.

 

As the value of commodities like oil continue to drop, countries and corporations are coming to grips with 2 realities. The first is the value of e-commerce as a strategic marketing and selling mode for all their other products and services. The second is that the cost and efficiency of e-commerce depends on the cost and efficiency of logistics; the cost of delivering a package. Increasingly, Amazon is examining the logistical business models of UPS. Shipping costs have gone from 11.7% of revenue vs. 10.4% of Amazon's revenue a year ago. The average cost of handling a parcel was $6.50 in 2000 and grew to $8.00 in 2013. This increase reflects the fact that UPS, one of Amazon's primary logistics providers, invested $11 billion to upgrade and expand its logistics network. Amazon is evidently considering providing its own organic logistics services. The UPS hub-spoke system whereby packages move from shipper to a sorting hub to the brown-colored van to your home is now considered obsolete. Amazon has poached more than 40 UPS supervisors and executives in the last three years. 

 

One of Elon Musks' innovations with Tesla is the elimination of the standard model of logistics for getting cars from the factory to the consumer. The factory-dealership-consumer model has been eliminated. The automobile is no longer just a means of transport; its battery is a power plant. 

 

As a former military logistics officer, freight forwarder and customs house broker, I am naturally intrigued by the relationship between e-commerce and logistics. Military officers developed Electronic Data Interchange or EDI in order to resupply surrounded Berlin after WWII. Former logistics officers were recruited (as civilians) to make the logistics of Walmart, Home Depot, ToysRus and Costco work. 

 

One of the other reasons for being intrigued by logistics results from having studied operations research in grad school and studied the transportation/allocation problem and having applied it in resupplying Marine units in the field at the National Training Center at Twenty-Nine Palms, (lovingly named Twenty-Nine Stumps) by Marines and in daunting places like the High Sierras during record high snowfalls. 

 

Alibaba provides it's organic logistics to some 200 cities in China. As it deploys its e-commerce platforms globally, the Chinese company must provide logistics as well as financial support services for its global deployment. Walmart, Amazon, E-Bay, GE, and other e-commerce platforms must likewise consider what their global deployment models will be as they scale across the globe. As Sun Tsu wrote, the line between disorder and order lies in logistics. Logistics and finance. 

I have pointed out with frequency how backward the US is in Fintech and in supporting with trade finance and cybersecurity the parallel global deployment and scale of e-commerce. US competitors are not waiting for either the US government or US corporate practitioners of the high arts of logistics in goods or finance to wake up.