Now UPS and FedEx have to answer the dreaded Amazon question as the e-commerce giant aims to launch a shipping service for third party sellers.
Amazon is reportedly planning to launch a delivery service that will compete with UPS and FedEx and ultimately give it control of the last mile of delivery.
The e-commerce giant historically has optimized its supply chain, distribution and logistics and then handed off to carriers such as UPS, FedEx and the U. S. Postal Service.
But now Amazon plans to launch Shipping with Amazon or SWA, according to the Wall Street Journal. The effort will roll out in Los Angeles. Yet another industry has to answer the dreaded Amazon question. Hell, even healthcare has to address Amazon these days.
Amazon’s move to develop its own shipping service isn’t surprising. Shipping could hamper Amazon’s plans in the future. A shipping service could also be a profit engine. All of Amazon’s 2017 operating income comes from AWS
UPS and FedEx have the ability to raise prices and upend Amazon’s cost structure. Shipping is a massive expense. Stifel analyst David Ross noted:
Meanwhile, Amazon mentioned how shipping is critical to its business in its annual report. Reliance on UPS and FedEx is also a liability. Amazon said in its 10-K:
This showdown with UPS and FedEx has been building for a while. Consider:
Add it up and the surprise isn’t that Amazon is launching SWA. The real surprise is that it took Amazon this long to do it.
More on Amazon’s key initiatives on delivery:
