A spokesman said UPS sees plenty of opportunity to grow with burgeoning e-commerce, and Memphis-based FedEx Corp. has long maintained it doesn't expect Amazon's delivery business to pose a serious threat to FedEx's bottom line in the foreseeable future.
The time frame for roll out is soon, too: Amazon is said to be readying the service for its first launch in LA in the "coming weeks", starting, not surprisingly, with companies that sell stuff via its website. Amazon Web Services - has had a big impact on the data center market.
The Amazon move also comes at a time when FedEx Express, the domestic and global air express business, is gearing up to spend more than $1.5 billion to modernize and expand hubs in Memphis and Indianapolis. By taking some of that in-house, Amazon could conceivably better control those costs.
Shipping With Amazon doesn't replace the courier or postal truck that delivers a purchase to the end customer. "Amazon's fleet of 767 cargo planes allows for later two-day shipping cutoff times for Prime members, and more flexible inventory management across fulfillment centers", they add in the note. "Expanding their delivery service to businesses is a flawless example of this", Ray Grady, president and Chief Customer Officer at CloudCraze, tells Small Business Trends in an email. Amazon shares were little changed.
Why Would AMZN Test Shipping With Amazon? Shipping and delivery will be used for the majority, if the location is outside of the retailers reach, then other shipping companies like USPS will be used for the last portion of the delivery. The company plans to offer the service at lower prices than those of competitors UPS and FedEx. Shipping With Amazon isn't an fantastic new product category, but if it's successful, it could prove to be yet another reason AMZN stock continues that growth.
"Shipping with Amazon", or SWA, would involve Amazon making pickups from third-party merchants selling items on its site. By contrast, Amazon only accounts for 3% of FedEx's annual revenue. It also created a service called "Deliver With Amazon", which lets local delivery services partner with Amazon to get packages to local customers. Amazon thinks that they will be able to provide a cheaper alternative for business customers with a more desirable pricing structure, but details have yet to emerge.
Shipping With Amazon has the potential to address at least one of those three factors: cutting costs. Amazon is so tech-savvy, organized and disciplined that if you aren't tightly controlling operations and using data effectively, you aren't going to stand a chance when Amazon launches SWA.