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Real Vision Investment Case Study Competition: Going Long on Logistics with Amazon

Ryerson MBA is participating in The Economist’s Real Vision Investment Case Study against teams from some of the world’s other leading MBA programs. Their challenge? Analyze Walmart and Amazon to determine which retail giant’s stock is the better investment choice over the next 10 years.

Here, team member Jesse Berger discusses how Amazon’s recent transportation and logistics developments influenced their analysis. Visit The Economist website to view the full analysis and vote for Ryerson MBA.

In our written submission for Real Vision Investment Case Study Competition, we wrote the following: “Recently, Amazon started testing its own private delivery network to cut out third party shipping partners and enter the transportation-logistics market.”

Our assessment was accurate. In the weeks that followed, Amazon announced the purchase of thousands of their own branded truck-trailers and has engaged in talks with Boeing to lease a fleet of cargo planes. These actions are the first pieces of concrete evidence that support previous reports of Amazon’s goal of circumventing their existing transportation and logistics partners to take full ownership of their delivery and fulfillment process.

They also fit with Amazon’s perpetual goal of cutting delivery costs, and come with the added benefit of cutting out another intermediary. While this is a great idea on the surface, whether Amazon can convert the notion of an in-house transportation-logistics unit into reality is another story entirely. As we wrote in our analysis:

“Amazon is performing an incredible high-wire balancing act by operating with narrow financial margin for error by simultaneously managing their online retail business, developing their own hardware technology products, and foraying into cloud computing.”

This development leads us to ask some important questions:

  • Can Amazon successfully incorporate yet another new element into their business structure?
  • Do they have the financial flexibility and know-how to pull it off?
  • Will this investment help or hinder their business?

Our team had to think long-term when confronting these questions. Find out how this affected our final decision by visiting The Economist’s Real Vision Investment Case Study.

And don’t forget to vote for us for the People’s Choice Award – registered users can vote daily.