Does the equation work both ways? Could the shippers cut deals with the manufacturers and in essence back door Amazon by having the superior delivery portion of the transaction? If so what are your thoughts on valuation disparity?

Eoin Treacy's view

Thank you for this important question and it’s something I’ve also been thinking about given Tesla Motors control of its entire sales process. In addition to the other major initiatives pioneered by the company, its decision to forego the dealership route in favour of selling cars directly is an example of how a manufacturer does not need to rely on bulk sales as it builds scale. 

I have often wondered why a company like Samsung Electronics does not do the same. It has the best-selling range of major kitchen appliances, TV’s and some of the most desirable handheld devices, all tastefully displayed on its website. Yet the company relies on Best Buy and Lowes etc. to sell its goods. Amazon also fits into that ecosystem. 

As competition and economies of scale improve and online shopping becomes ubiquitous the argument for using intermediaries to sell one’s products is less compelling. Online real estate such as that offered by Amazon is a valuable commodity but it is not beyond the bounds of possibility that other venues will also come to represent valuable traffic hubs. 

At present there is little evidence manufacturers are willing to eschew intermediaries but in the event they transition to a direct selling model the valuation afforded Amazon would of course come into question.