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Amazon vs Chewy Logistics

Philippe Hemard
Former VP, Amazon Logistics Europe

Learning outcomes

  • How vertically focused ecommerce providers like Chewy or Zooplus could have an advantage in logistics versus Amazon
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Executive Bio

Philippe Hemard

Former VP, Amazon Logistics Europe

Philippe has spent over 25 years developing end-to-end logistics systems from vendors to customers, including 18 years at Amazon.com. He joined Amazon in France in 2000 as Distribution Centre General Manager, moving to Amazon.co.uk (Scotland) in 2004, to support business growth within the UK. Philippe then took up several senior leadership positions in European Operations at Amazon EU Headquarters in Luxembourg, culminating in the role of VP Amazon Logistics Europe from 2015-18. Before joining Amazon, Philippe worked for Danzas (now DHL) in France. Throughout his career he has worked on network modelling, procurement and buying processes, inventory management, fulfillment management, and transportation network management. Since March 2018 Philippe has run his own consultancy business, holds several board positions and teaches Supply Chain Management and Global Logistics Strategy at university. Read more

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Interview Transcript

Just thinking back to the pet food example. It seems as if you really organize your warehouse, specifically for the category and you have some automated, Kiva-like systems to pick this stuff, at density, you can really compete with Amazon, inside the box, inside the warehouse, on efficiency, for your category?

Yes; I’m definitely convinced that there are people who may be more efficient, particularly when their product categories are very similar and the product types are very similar. I’m sure that you could be even more efficient than Amazon. Amazon is very efficient for the kind of structure of catalogue that they have. That’s the key. I don’t think of Amazon has the best fulfilment cost ever. I think some other people will have a better fulfilment cost. But nobody could reach it with the same catalogue and the offer they have; that’s the difference. Unfortunately, you cannot reproduce that. We started, at one point in Amazon, to do benchmarking in different countries, where we would benchmark activities, end to end. You start to find people who can compete with Amazon and, usually, the best competitors of Amazon are the ones that are specialists. It’s a choice, but you will never be the size of Amazon, if you are a specialist. To sell hundreds of millions of pet food, that’s not possible. But yes, you could be very efficient in doing so and become a very strong competitor.

Basically, in those benchmarking activities, originally, we were benchmarking against people who were doing the same as Amazon, such as online sellers. In those cases, we were usually more efficient than most of them, in every country. But then we started to benchmark with specialists, and decided to benchmark Zalando, for example, for shoes and apparel and, of course, that was tighter. For shoes and apparel, Zalando was pretty efficient, in just doing that. We developed some fulfilment centers that we focusing on those products because we discovered that they were rarely cross-selling. They were sometimes, but it was less important and it was better to optimize the warehouse. With those kind of things, I am definitely convinced that some people, being specialists, could reach better cost on their kind of product.

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