With Home Depot having considered buying shipping firm XPO Logistics, reports indicate that Amazon could make a competing bid in order to maintain an edge in last-mile delivery. Though the online retail giant already has a massive and sophisticated logistics and fulfilment network, an acquisition of XPO would give Amazon an even bigger advantage, per analysts.
Both Amazon and Home Depot use XPO Logistics to deliver heavy and big items such as furniture and appliances such as couches, stoves and refrigerators. XPO has emerged as a leader in this segment since traditional shipping firms such as United Parcel Services and FedEx Corp are not in a position to deliver bulky items ordered online. Home Depot’s reason for considering the purchase of XPO Logistics is to counter Amazon in anticipation that the online retail giant was also eyeing such a deal.
White glove service
XPO’s attractiveness as an acquisition comes not only from its specialty in delivering heavy and bulky items but also offering a white glove service in the last-mile delivery segment. With a white glove service ordered items are not only delivered to the customer but they are unpacked and installed.
At the moment Amazon already offers a white glove service with regards to big-ticket items such as electronics. Lately Amazon has also ventured into oversize products and has launched private furniture brands with intentions of increasing its market share in home furnishings and furniture. This will require white glove services that are more robust as well as a logistics provider that is dedicated.
“XPO Logistics is one of the best, if not the best, logistics company providing such services through their network … If Home Depot doesn’t acquire XPO, I won’t be surprised to see another company step in and acquire XPO,” supply chain consultant Brittain Ladd said.
Besides Home Depot and Amazon other retailers that would be interested in acquiring XPO Logistics include Chinese e-commerce giants JD.com and Alibaba and Swedish firm IKEA group. Others include U.S. retailer Walmart and shipping giants UPS and FedEx. According to analysts Amazon has the financial muscle to outbid all the others if it decides to make a move on XPO.
This comes in the wake of Amazon announcing that this year’s holiday sales season set another record with four million new members having signed up for Amazon Prime in one week. Shopping on the mobile app of Amazon also increased by 70%. The top-selling products during the season were Fire TV stick and the Echo Dot.