UPS, FedEx Sink As Bezos Launches "Shipping With Amazon"

Putting Jeff Bezos in a Super Bowl ad isn't the only major material business risk Amazon is taking in Q1.

After more than a year of anticipation as Amazon has expanded the number of its distribution centers, partnered with landlords to install designated Amazon lockers in mailrooms in millions of apartments across the US, creating a system to allow couriers to deliver packages inside customers' homes and experimented with delivery from third-party warehouses in some test markets, the e-commerce behemoth announced today that it will launch a "Shipping with Amazon" service that will entail picking up packages from businesses and shipping them to consumers, according to the Wall Street Journal, which cited unnamed sources familiar with the matter (ie AMZN's comms department).

The service will compete with ground carriers with UPS and FedEx, per Bloomberg:

  • AMAZON PLANS TO LAUNCH 'SHIPPING WITH AMAZON' IN U.S. THIS YEAR, SOURCES SAY
  • NEW AMAZON SHIPPING OPTION WOULD COMPETE WITH UPS AND FEDEX, SOURCES SAY
  • 'SHIP WITH AMAZON' TO START IN LOS ANGELES FIRST, THEN GO NATIONWIDE, SOURCES SAY

Amazon expects to roll out the new delivery service in Los Angeles in coming weeks, partnering with third-party merchants that sell goods via its website, according to the people. Amazon then aims to expand the service to more cities as soon as this year, some of the people say.

The first stirrings of the eventual launch first emerged last October when Amazon announced it would begin "experimenting" with a new program called "seller flex" that would allow them to take over the process of shipping from third-party warehouses. That program was first tested in the Los Angeles area.

as WSJ reminds us, this is the latest step by Amazon to create its own parcel network. In the last two years, Amazon has expanded into ocean freight while building a network of its own drivers who can now deliver inside homes and leased up to 40 aircraft while establishing an air cargo hub.

To be sure, the company already delivers orders from its own warehouses (these are the items that typically qualify as "Prime") in 37 different US cities.

“We’re always innovating and experimenting on behalf of customers and the businesses that sell and grow on Amazon to create faster lower-cost delivery choices,” a spokeswoman said in a statement.

For deliveries outside of its reach, the company will use the Postal Service and other carriers to take care of the so-called last mile to customers’ doorsteps.

Unsurprisingly, the stocks of private shipping companies FedEx and UPS are sinking pre-market on the news, with UPS down 7.1% and Fedex off 5.4%, while Amazon shares inched higher...

Of course, whether any of this will be successful remains to be seen: Amazon is starting from a significant disadvantage - FedEx and UPS have massive networks built up throughout the country - and UPS is spending $7 billion this year alone on maintenance and upgrades. But Amazon has a pretty solid track record of accomplishing what it sets out to do.

A spokesman said that UPS continues to support Amazon and other customers and doesn’t comment on customers’ business strategies or decisions regarding using UPS services.

FedEx didn’t have an immediate comment. On the company’s December earnings call, executives were asked about what would happen if Amazon started competing for its shipping business, to which they said they don’t comment on hypothetical situations. They added that Amazon was a longstanding customer, but that no customer represented more than 3% of revenue or volume.

Amazon’s push into logistics reflects its growing ambitions across a wide range of new businesses beyond online retail. The company runs a dominant cloud-computing services division, a Hollywood studio and a massive marketplace and logistics operation for sellers. Last year, it acquired Whole Foods for roughly $13.5 billion, transforming it into a brick-and-mortar grocer overnight.

In addition to the delivery service, Amazon is also launching a new logistics service that will allow third-party warehouses to qualify for prime and ship goods from their own warehouses directly to customers instead of sending them to an Amazon Warehouse first for processing through its "Fulfillment by Amazon" program, using software provided by Amazon...

Amazon will exert a measure of control over these third party deliveries, allowing it to fill space on its trucks with extra third party items, adding valuable revenue. Though, for now, it will continue to use third party carriers like FedEx and UPS.

Comments

Handful of Dust RAT005 Fri, 02/09/2018 - 09:47 Permalink

UPS , FedEx and USPS need to become more efficient and less wasteful.

 

For example, USPS priority mail prices shot up ~8% in Jan yet their service (as measured by delays in deliveries) sunk. USPS needs more competition and Amazon will give that to them. USPS (like all gubmint employment) also needs the ability to fire lazy people. Inability to fire an employee (with cause) tends to result in poor performance.

In reply to by RAT005

Endgame Napoleon any_mouse Fri, 02/09/2018 - 08:20 Permalink

It might be because government is hitting a lot of citizens hard, not the sex-and-reproduction crowd, with their expensive SUVs that they drive on multiple vacations that they can somehow afford when they cannot afford childcare.

Governent is not doing one d****d thing to ease the lives of the majority of citizens whose rent consumes more than half of their earned-only income. Yet, it is piling on and doubling the refundable child-tax-credit welfare for citizens, legal and illegal immigrant parents who work part time to stay below the earned-income limit / cut off for the programs, even though the tax welfare was already up to $6,444 on top of other welfare that covers their major household bills in many cases. 

At least, delivery that is this precise, and not dependent on employers who accommodate delivers for employees, makes the elimination of the expense of a car more affordable for those who do not get family discounts on every product, in addition to all the monthly welfare and tax welfare from governent to reward sex and reproduction.

Employers accommodate anything and everything for frequently absentee working parents, whether or not they meet their quotas, but few of them tolerate deliveries of items at work, and most people do not want to pay for shipped items that end up on the lawn for hours before they can get home from their over-an-hour commute.

Moms get to leave work at 2:30 every day in the middle of the rush of paying customers, thus missing the traffic rush, just like they take off for whole days and weeks beyond PTO and multiple pregnancy leaves with no firing. Childless employees can forget rushing home to take care of details of their personal lives. They will be fired quickly and mercilessly for any triviality, even when they have attended work every day, stayed the whole day and met the quotas every month. 

In reply to by any_mouse

Xena fobe Alohakid Fri, 02/09/2018 - 09:06 Permalink

He/she has a valid point.  Single people are taxed at higher rates but bear all expenses alone.  You want kids, you be reaponsible for them.  Why subsidize population increases when resources and space are declining?

About the work place, it's never been merit based.  So no point expecting that. 

In reply to by Alohakid

EddieLomax any_mouse Fri, 02/09/2018 - 09:19 Permalink

Yep, Amazon was set up from the very beginning to be a monopoly.

They are not doing anything here any more profitably than their rivals, but when they are the majority customer too they can squeeze every last cent of profit out.

There is a strong case for Amazon to be broken up as it is making business moves that only work through massive sums of money and market control.

In reply to by any_mouse

Endgame Napoleon Max Cynical Fri, 02/09/2018 - 08:29 Permalink

If they can get through the gauntlet to get a union position (at UPS), those delivery guys make a good living, unlike so many women in female-dominated areas, including the ones with no pay-per-birth freebies from governent, spouses or ex spouses, living on earned-only income and said “not to need the money” as much as parents. Many people who are paid beans, competing with hordes of tax-subsidized workers or workers with spousal income who, due to their unearned income for womb productivity, are willing to work for a pittance / part time, have to be concerned with cost on everything, whether that is shipping or anything else.

In reply to by Max Cynical

tion Endgame Napoleon Fri, 02/09/2018 - 10:43 Permalink

EGN, your sales background and experience running a shop are assets worth capitalizing on. High overhead retail isn’t workable, but the internet opens up so many doors. Get your side hustle on and think of some ways to farm those yuppies. Learn how to take good photos and tell a story.

We aren’t really built to live as strong independent women, but it is good you aren’t letting that piece of shit drag you around by the hair anymore. Any time you learn to stop crying those types just keep escalating, there is no end to the stupid prizes. But if you still think you don’t have the power to benefit yourself, you didn’t run far enough.

 

In reply to by Endgame Napoleon

XBroker1 Bendromeda Strain Fri, 02/09/2018 - 11:04 Permalink

I can no longer review products on amazon, something about my rantings about feminism. At one time I received a book of funny amazon reviews for free bc one of mine was included in it. Now we're on the outs bc I pointed out that male wire ends were cheaper than female wire ends, yet they have more expensive (or at the least the same) parts. This is actually true and subliminal message to men of their value in society. That was one of the reviews that caused my censorship.

In reply to by Bendromeda Strain

blindfaith Baron von Bud Fri, 02/09/2018 - 07:46 Permalink

I needed a "sharpie" oil based fine point pen, and Office Max didn't carry BLACK.  Holding my nose, Amazon had it for a buck more than Max's price for color pens, but had FREE SHIPPING.  It arrived in a box a large book could fit in (instead of an envelope) and delivered by UPS ( instead of the PO).  The pen was $4.00, free shipping.  The label on the box was $8.00 shipping so someone LOST $4.00 on the sale, but who? the stockholder?  The pen was wrong, so now they have to send a new one.  Yep, Amazon will own the world as long as the stockholders foot the bill.

In reply to by Baron von Bud