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WSJ: Amazon Plans Delivery Service in Challenge to FedEx, UPS

Image: WSJ: Amazon Plans Delivery Service in Challenge to FedEx, UPS
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Friday, 09 Feb 2018 09:17 AM

Amazon.com reportedly is gearing up to launch a delivery service for businesses.

The service is called "Shipping with Amazon" and will see the tech giant picking up packages from businesses and delivering them to customers, the Wall Street Journal reported on Friday.

Such a service would pit the e-commerce giant against the likes of FedEx and UPS.

The service is called "Shipping with Amazon" and will see the tech giant picking up packages from businesses and delivering them to customers, the WSJ said, citing people familiar with the matter.

Amazon's business delivery is expected to roll out in Los Angeles in the coming weeks with third-party merchants that sell goods via its website. More cities are to follow.

The U.S. firm will eventually roll this out to other businesses with Amazon planning to undercut UPS and FedEx on price, according to the WSJ.

The company is preparing to begin the offering in Los Angeles with its ‘third-party merchants’ and then roll it out more broadly, the Journal said.

Rumors of such an Amazon service have swirled in the market during recent months.

Handling more deliveries itself would give Amazon greater flexibility and control over the last mile to shoppers’ doorsteps, let it save money through volume discounts, and help avoid congestion in its own warehouses by keeping merchandise in the outside sellers’ own facilities, Bloomberg has reported.

In recent years, Amazon introduced Seller Fulfilled Prime, which lets merchants who don’t stow items in Amazon warehouses still have their products listed with the Prime badge, meaning they’ll be delivered within two days. The merchants had to demonstrate they could meet Amazon’s delivery pledge, and many used UPS and FedEx for deliveries. The new service gives Amazon control over those deliveries instead, even if it continues to use third-party couriers.

The project underscores Amazon’s ambitions to expand its logistics operations and wean itself off the delivery networks of UPS and FedEx. A rush of last-minute holiday orders in 2013 forced Amazon to issue refunds to shoppers who didn’t get gifts in time, highlighting the perils of being overly dependent on partners for a main part of its business pledge -- quick, reliable delivery. Taking over some responsibility for delivery enables Amazon to protect that edge as rivals like Wal-Mart Stores Inc. enhance their own delivery operations.

Amazon is constantly experimenting to shorten delivery times and reduce costs. It built a network of "sortation centers" around the country, where packages are sorted by zip code and trucked to post offices, with the U.S. Postal Service handling the final mile of delivery since it already has workers bringing mail to every home in the country. It launched Amazon Flex, which uses independent contractors driving their own vehicles to deliver packages from Amazon shipping hubs, guided by a smartphone app. Prime Now offers a limited assortment of products, such as phone chargers and bottled water, in as little as an hour to shoppers in many cities.

Many online merchants who sell on Amazon’s marketplace pay fees to store products in the retail giant’s warehouses, letting Amazon gather and pack products when orders arrive. But the popularity of this service strains Amazon’s capacity during the end-of-year holidays. Online holiday spending in the U.S. will hit $129 billion this year, up 12 percent from a year ago, according to Forrester Research Inc.

(Newsmax wire services contributed to this report).

© 2018 Newsmax Finance. All rights reserved.

   
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The service is called "Shipping with Amazon" and will see the tech giant picking up packages from businesses and delivering them to customers.
amazon, fedex, ups, delivery, service
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2018-17-09
Friday, 09 Feb 2018 09:17 AM
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