Amazon moves closer to FedEx and UPS’s turf
Amazon.com plans to launch in “coming weeks” a new delivery service that will compete directly with FedEx and UPS, according to The Wall Street Journal.
Named Shipping with Amazon (SWA), the service will launch in Los Angeles and initially be restricted to companies selling on Amazon’s own marketplace. But SWA is expected to expand “to more cities as soon as this year” and eventually serve businesses not affiliated with the site.
Some reports have compared the slow rollout and focus on its own third-party sellers as similar to the introduction of its successful AWS cloud business.
At least at the start, the service will involve Amazon trucks picking up goods from merchants’ warehouses and bringing them to Amazon fulfillment centers. The “last mile” will be handled by the U.S. Postal Service and other carriers. Longer term, a larger delivery system could take packages to customers’ homes. Amazon already delivers to homes in 37 U.S. cities.
On Friday, shares of UPS and FedEx both fell on the news on the potential threat. Amazon’s past investments in ocean freight, cargo planes and trailers have continued to drive debates over whether management’s long-term goal is to gain more control over the delivery process or to outright bypass the carriers.
Streamlining the delivery process is expected to cut as much as a day off delivery. Having more control over its shipments over long distances could also save Amazon about $3 per package or $1.1 billion annually, according to the WSJ report.
“If Amazon controls their customer’s supply chain they could potentially charge less for the items on their platform, which could create a price war with Walmart and possibly Target,” John Haber, CEO of Spend Management Experts, a supply chain consulting firm, told USA Today.
Analysts believe it would take years for Amazon to build a full-scale delivery system, but the moves continue to test what leverage major carriers may still have on Amazon.
- Amazon to Launch Delivery Service That Would Vie With FedEx, UPS – The Wall Street Journal
- Amazon’s answer to UPS is reportedly getting its first proper launch in LA – The Verge
- Amazon is testing its own delivery service. If it succeeds, expect a price war – USA Today
- Amazon’s Newest Ambition: Competing Directly With UPS and FedEx – The Wall Street Journal
- Amazon looking to abandon UPS, FedEx in favor of its own delivery service – Ars Technica
- Amazon reportedly launching a delivery service for businesses; FedEx, UPS shares slide – CNBC
- Is Amazon preparing to dump FedEx and UPS? – RetailWire
- Amazon developing Uber-like trucking app – RetailWire
- What does all the noise around Amazon’s ‘Seller Flex’ program mean? – RetailWire
DISCUSSION QUESTIONS: Does the launch and strategy around Shipping with Amazon (SWA) make sense for Amazon at this point? Do you see it as more likely that Amazon is looking to complement or replace the major carriers with its ongoing logistics investments?