Amazon opens its supply chain to all: Can Indian logistics firms keep up? – Delhi News Daily

Amazon has opened its supply chain network to businesses outside its marketplace ecosystem. The move is seen as a major strategic shift that could reshape the logistics industry globally and even intensify competition in India’s delivery market.

On Monday, the company announced the launch of Amazon Supply Chain Services (ASCS), allowing businesses in sectors like healthcare, automotive, manufacturing, and retail to use its freight, warehousing, fulfilment, and last-mile delivery network. The move positions Amazon as a full-stack third-party logistics, or 3PL, provider that will compete directly with traditional logistics firms such as UPS and FedEx, and Indian players such as Delhivery and Blue Dart.

“This is an exciting step in bringing the logistics network we built for our customers to all businesses, much like we did for cloud infrastructure when we launched Amazon Web Services,” he said.

The announcement triggered a sharp market reaction globally, and the shares of UPS and FedEx fell more than 9 per cent during Monday trade in the US, while transportation and logistics firms, including GXO Logistics and Forward Air, also declined. 

In India, shares of Delhivery fell as much as 4 per cent on Tuesday after the announcement amid concerns that Amazon’s logistics push could intensify competition in business-to-business logistics, ecommerce fulfilment, and parcel delivery.

Analysts say investors view Amazon’s move as a structural disruption rather than a short-term competitive challenge. 

Turning logistics into a profit engine 

Industry experts say the launch of ASCS indicates Amazon’s broader strategy: converting its logistics infrastructure from a cost centre into a revenue-generating services platform.

Over the last 20 years, Amazon has built a massive logistics network that includes more than 100 cargo aircraft taking more than 250 flights daily, over 1,200 global logistics facilities, including approximately 350 large-scale fulfillment centers. Amazon initially developed this network to support its ecommerce operations and marketplace sellers, which is now accessible to external businesses across industries. 

What Amazon’s move means for Indian businesses 

Industry experts say Amazon is attempting to solve a long-standing pain point in logistics by offering a single integrated network that combines freight movement, warehousing, and fulfilment with technology-driven visibility and optimisation. Rahul Mishra, partner at Bain & Company, said the launch could particularly benefit small and mid-sized businesses that lack scale and operational sophistication.

“By combining transportation, warehousing, and fulfilment under a single technology-driven system, the outcome is likely to be reduced fragmentation, improved inventory placement, and enhanced delivery predictability,” Mishra said.

“For SMEs, especially in retail and manufacturing, this can unlock faster turnaround and better inventory control,” said Jitendra Srivastava, chief executive officer at Triton Logistics & Maritime, a Mumbai-based end-to-end logistics provider. “But cost reduction will depend on volume, network access, and dependency on a single platform.”

Sunil Kharbanda, founder and chief operating officer at Trezix, a Surat-based AI led Global trade platform, said Amazon’s move converts “a captive supply chain advantage into an open logistics infrastructure play”.

Pressure likely in parcel and fulfilment segments 

Experts said the biggest disruption is likely to be felt in parcel delivery and fulfilment-led warehousing, where Amazon already operates at a significant scale.

“The most vulnerable segment is parcel and last-mile delivery,” Srivastava said. “That’s where Amazon has the deepest control and data advantage.”

Kharbanda added that ecommerce, direct-to-consumer retail, and high-volume consumer categories are likely to face the highest competitive pressure because Amazon already has “unmatched scale, data depth, and operational sophistication”.

According to K Srikumar, senior vice-president and co-group head at Icra Limited, Amazon’s entry could improve efficiency across inventory management and goods tracking in India’s fragmented logistics sector.

“Across segments, last-mile logistics providers appear the most vulnerable, as Amazon is likely to be better positioned due to its extensive reach and diversified network,” Srikumar said.

Analysts said freight and specialised industrial logistics may remain relatively insulated in the near term because these segments still depend heavily on local relationships, compliance capabilities, and operational expertise.

“The disruption will likely be highest where services are standardised, and digitisation can unlock scale benefits,” Bain’s Mishra said. 

Pricing pressure and margin concerns 

Industry executives and analysts expect Amazon’s move to increase pricing pressure across the logistics industry, particularly in standardised B2B contracts.

“Pricing pressure in B2B contracts is inevitable,” Srivastava said. “As capacity expands and tech-led optimisation improves utilisation, clients will expect lower rates and higher service levels.”

Kharbanda said enterprises are likely to benchmark traditional logistics providers against Amazon’s scale, visibility, and service standards.

Mishra added that bundled service offerings combining transportation, warehousing, and fulfilment could compress margins for traditional logistics firms that rely on separate pricing structures.

“This shift will intensify competition and push providers to differentiate through service quality, specialisation, or network strength rather than price alone,” he said.

Icra’s Srikumar said Amazon could leverage its existing infrastructure to offer steeper discounts and bundled contracts, forcing incumbents to strengthen technology capabilities and operational efficiency. 

India’s strategic challenge 

The development also raises larger strategic questions for Indian logistics firms. Can domestic players match Amazon’s integrated logistics stack and capital intensity? Experts say the answer may depend on how aggressively Amazon localises the model in India and how quickly incumbents adapt.

“Markets don’t reward size alone. They reward clarity of value,” Srivastava said. “Logistics players who differentiate through sector expertise, relationships and reliability will hold pricing power even in a more competitive environment.”

For now, Amazon’s move signals a larger transformation in the logistics business itself. What was once viewed primarily as the physical movement of goods is increasingly becoming a full-stack provider, a technology, data, and infrastructure platform business. Industry experts say the companies that fail to adapt to that shift may find it harder to compete in the years ahead.