The future
If Amazon carries out an outsourcing strategy, the company would essentially become a marketing company that dabbles with fulfillment when it comes to books, music and video.
While that's a reversal of Amazon's previous plans, much as has changed since the Internet's go-go days when Amazon was a $300 stock. When raising capital was easy, Amazon spent big bucks to build warehouses in anticipation of the huge amount of business it would grab from other retailers.
"In 1999 you had to have your own fulfillment and have good customer service 99.9 percent of the time," Milne said. "The world has changed; the competitive pressures have eased."
One of Amazon's main rivals, eToys, has gone out of business. That's largely because eToys decided to spend heavily in 2000 on its own distribution centres. In 1999 it outsourced its fulfillment to FingerHut, a unit of Federated Department Stores, but ended the relationship over customer service glitches.
But that doesn't mean customer service would necessarily suffer if Amazon outsourced, Milne said.
"The days when you had to own all the fulfillment are gone," he said. "Finger Hut gave outsourcing your fulfillment a bad name, but there are plenty of companies that can deliver. It still comes in an Amazon box."
