The Economic Integration Group has produced an extensive analysis it calls the Distressed Communities Index (DCI).  The level of distress reflects seven measures:

1. No High School Degree: Percent of the population 25 years and over without a high school degree
2. Housing vacancy: Percent of habitable housing that is unoccupied, excluding properties that are for seasonal, recreational, or occasional use
3. Adults not working: Share of the population 16 years and over that is not currently employed
4. Poverty: Percent of population living under the poverty line
5. Median income relative to state: Ratio of the geography’s median income to the state’s median income
6. Change in employment: Percent change in the number of individuals employed between 2010 and 2013
7. Change in business establishments: Percent change in the number of business establishments between 2010 and 2013

On the map above darker green reflects less distress, deeper red more distress.  It is interesting to compare this map with where Walmart has decided to close stores or where Amazon is concentrating its fulfillment centers.

Demand growth is likely in green areas while per capita declines are occurring in red zones.

Walmart says it is making progress in forward deploying product to customer-facing rather than other shelves.  In a teleconference with investors and analysts, CEO Douglas McMillon said:

We continued to make progress in managing inventory. Overall inventory grew 0.9 percent, or approximately 25 percent the rate of total sales growth. Comp store inventory declined 2.9 percent, as we remained focused on cleaning up our backrooms and using processes such as CAP and top-stock to ensure better in-stocks for our customers. Inventory will remain a key focus area for us in this new fiscal year. 

The Wall Street Journal explains:

Wal-Mart has been trying to gain better control of its sprawling supply chain, in an effort to ensure more goods are put before consumers on store shelves, rather than gathering dust and racking up costs in warehouses. The latest numbers indicate the retailer is succeeding, though that may be small consolation if sales don’t pick up.

Amazon long-ago labeled its supply nodes as "Fulfillment Centers" (not distribution centers).  As a matter of fundamental strategy Amazon is a demand fulfillment enterprise, not a producer or distributor of supply. The company seeks to "own" demand by providing consumers with an easy and seamless way to express demand that the firm will fulfill in a manner that increasingly causes consumers to simply neglect potential competitors.

Last summer my wife ordered a jar of ginger jam from a small English firm that sells through Amazon. The package arrived broken and dripping.  Before she had time to complain to the seller, Amazon asked about her "experience".  Amazon then facilitated the quick receipt of a -- much better wrapped -- replacement.  Demand was fulfilled, expectations (regarding Amazon) exceeded.

According to internal documents reviewed by Bloomberg, this attention to detail is part of an ambitious strategy to expand the "Fulfillment By Amazon (FBA) service, which provides storage, packing and shipping for independent merchants selling products on the company’s website."  By serving -- and mentoring -- these independent merchants the once-upon ideal of a Whole Earth catalog would not only be achieved but supported with easy payments, quality assurance, and rapid delivery.

While FBA is demand-facing, the supply-facing operation will be a new venture called “Global Supply Chain by Amazon." According to Bloomberg, "The new business will locate Amazon at the center of a logistics industry that involves not just shippers like FedEx and UPS but also legions of middlemen who handle cargo and paperwork associated with transnational trade. Amazon wants to bypass these brokers, amassing inventory from thousands of merchants around the world and then buying space on trucks, planes and ships at reduced rates. Merchants will be able to book cargo space online or via mobile devices, creating what Amazon described as a “one click-ship for seamless international trade and shipping.”

I still contend Amazon has every plan and intention to continue to use existing shippers.  But if GSCA is successful Amazon will have almost complete power to set shipping terms and convert systemic savings into an immense price advantage.

In early January the Washington Post developed a very helpful analysis of how the recently announced closing of 154 Walmart stores in the United States relates to issues of population density and household income. Most store closures were concentrated where both factors are low. Here is one visual analysis. More detail is available by accessing the original story.

In a 10-K filed for its fiscal year that closed December 31, Amazon -- for the first time -- identifies itself as a "transportation services provider".

Transportation costs are a major expense for Amazon and a significant source of revenue for UPS, FedEx, US Postal Service, and other delivery companies. 2015 the company spent more than $11.5 billion, a $2.8 billion increase over 2014 levels.

The SEC language has spurred further (well-informed) speculation that Amazon is targeting its current vendors -- especially UPS and FedEx as competitors. 

I'm not so sure.  Given the level -- and dynamism -- of demand in many growth-markets and the outer limits of any supply operation, I can more easily imagine Amazon developing its own multi-capable fleet even as it continues to engage several third-party providers.  This "all of the above" delivery strategy is fairly typical in the highest velocity markets.