why Amazon made headlines recently when it announced

why Amazon made headlines recently when it announced 

Amazon made headlines recently when it announced plans to invest $800 million to evolve the company’s free two-day Prime shipping to free one-day Prime shipping. 

Competitors of Amazon put on a brave face about how they too will be able to offer one-day shipping to their customers. Industry analysts spoke glowingly of how Amazon once again raised the bar.

 Here’s the problem with Amazon’s announcement: One-day free shipping isn’t the goal and it never has been. Instead, the goal of Amazon has always been to create the most advanced network of logistics facilities and physical retail locations where inventory can be deployed rapidly and cost-effectively to meet customer demand in minutes, not hours or days.

The ability of Amazon to deceive its competitors will one day be a must-read case study. The strategy utilized by Amazon is eerily like the strategy former President Ronald Reagan used to force the former Soviet Union to spend additional billions of dollars preparing for an attack that never materialized. 

Reagan’s announcement in 1983 that the U.S. would invest in developing an impenetrable shield, the Strategic Defense Initiative (SDI), to protect the U.S. from a Soviet missile attack, forced the Soviet Union to rethink its entire military strategy. 

Leaders of the Soviet Union and the military wasted years and billions of dollars trying to create a better strategy. SDI was never deployed, but the deception achieved the desired result, helping accelerate the collapse of the Soviet Union.

Amazon’s competitors will invest heavily and work furiously to achieve FREE one-day shipping. Hint: There is no such thing as free one-day shipping or any day shipping. Walmart will be the first to claim it has once again caught up with Amazon (probably via a tweet), and the company will try and make the argument that its network of stores gives Walmart an “advantage over Amazon.” Walmart’s executive team reminds me of André Maginot, the mastermind behind one of the greatest failures in history, the Maginot Line. According to British historian Ian Ousby:

Time treats few things more cruelly than the futuristic fantasies of past generations, particularly when they are actually realized in concrete and steel. Hindsight makes it abundantly clear that the Maginot Line was a foolish misdirection of energy when it was conceived, a dangerous distraction of time and money when it was built, and a pitiful irrelevance when the German invasion did come in 1940.

Most glaringly, it concentrated on the Rhineland and left France’s 400-kilometer border with Belgium unfortified.

Note to Walmart: Your stores do not give you an advantage over Amazon, as Amazon can easily increase the total number of distribution locations greater than your store count and can do so at a fraction of the cost. Feel free to send a tweet if you disagree.

As with all deception, at some point the truth becomes known. I estimate that within three years Amazon will announce the ability of the company to fulfill orders to customers in minutes, including groceries and general merchandise, across most of the U.S. 

How will Amazon do this? By building the largest and most integrated logistics network in the U.S. By ‘integrated’ I mean that Amazon is implementing a strategy whereby inventory will be held in apartment buildings, hospitals, residential developments, apartment complexes, office parks, specially built fulfillment centers, specially designed Consumables Distribution Centers for groceries, satellite distribution centers, delivery stations, mobile inventory vehicles, airport rapid receive and deploy locations, and so on. Every process within the chain of fulfilling an order will be automated. 

Amazon will leverage its mastery of data to create a living supply chain that anticipates demand making it easier for Amazon to meet demand.

Executives at Amazon’s competitors will try to put on a brave face, but deep down inside, the truth will be known—Amazon won.