Blog / Amazon Goes (almost) All In
3 minutes read

Amazon Goes (almost) All In

After beta testing its last-mile delivery service, Amazon today announced the confirmed roll-out of its Amazon Delivery Service Partners program which will allow hundreds of entrepreneurs to operate their own mini delivery network of up to 40 vehicles. For those of us who’ve been predicting that Amazon would eventually take its logistics destiny into its own hands, this marks a turning point.

Sure, this isn’t their first foray into the delivery business, but everything up to this point has basically been a half-step (or less). Deliveries made by uniformed (or at least consistently attired) drivers out of Prime-logo’d vans will be a far cry from nondescript delivery vehicles emblazoned with not much more than crayon markings. Yep. This is big.

Impact on major carriers

It’s big, but I don’t want to overstate this move. This isn’t in direct competition with UPS, FedEx, or USPS. This is a delivery service, not a pickup service. Contracted vehicles will start their day at an Amazon facility where the vans will be loaded with that day’s deliveries. Amazon isn’t generating revenue. They are limiting their cost exposure from the big carriers and exerting operational control over reliability and performance. This isn’t to say that they aren’t heading that direction, but it will require an entirely different network than what’s being put into effect here.

Still, that doesn’t mean that that this is a non-event for the big three. As I’m writing this, both UPS and FedEx stocks are trading down about 2.5% on the day. While last-mile volume isn’t a profit engine for these carriers, it does “feed the beast” by lowering network cost per piece and utilizing excess capacity. It’s beneficial, but it’s not critical. Nevertheless, the game is afoot.

Impact on regionals

While last-mile volume might not constitute their “life blood”, I believe the impact will be felt much more heavily on the regional carriers than the nationals. For years, I’ve been predicting to whoever was willing to let me bend their ear, that instead of building a pickup & delivery network from scratch, Amazon could instead whip out their checkbook and acquire a handful of regional carriers and cobble together a nationwide, integrated system. Today’s announcement hasn’t changed my mind about that possibility. A fair portion of this delivery volume is currently tendered to the regional players whose systems are more reliant on a less diverse customer base. This move could weaken their financial positions – perhaps enough to make an Amazon by acquisition much less expensive. Nope. This is far from dissuading me from my prophesy. If anything, I’m doubling down.

Impact on driver shortage

There’s a lot of hand-wringing over the lack of drivers (50K short as of last count) and rightfully so. The concern would be that this could be an attractive alternative and further exacerbate this. I understand the basis for the concern, but I don’t believe it’s a legitimate one. One of the owners of the beta test businesses stated that his employees work “fairly regular hours” which is hardly a ringing endorsement of the current potential for someone looking to jump from a driving job that pays increasingly well. The ability to go home every night will be attractive to some, but the job still needs to pay the bills, and I don’t see this earning someone more than $30K – $50K a year (compared to $50K – $100K+). And this will look even less attractive after their first holiday season (9:30 p.m. deliveries can take its toll when you’d rather be enjoying that time with your family).

Is this a big deal?

While this will continue to make significant headlines for the next several days, it’s near term importance is arguably overblown. Still, this marks significant step in Jeff Bezo’s evolution from “hawker of books and DVDs” to “Lord God King Retail”. This is a good move for Amazon (in my opinion), and it sounds as if they are making the barriers to entry for small businesses to get into the action manageable (as little as $10,000), so this can be an exciting opportunity for some.

Color me intrigued.

James Founding Partner
2 Minute Read

It's not you, it's them. Shipping costs on the rise

If you feel like shipping costs are rising faster than ever before, it’s not just you. The major carriers are raising their rates at a pace we haven’t seen in over a decade. As a result, online retailers and
Brittany ShipRx Contributor
2 Minute Read

FedEx set to spend $100 million to increase safety

On June 24, FedEx released their fourth quarter and full-year report, which noted that the carrier is “consistently ranked among the world’s most admired and trusted employers.” They go on to say that “FedEx inspires its 570,000 team members
Mike Partner
2 Minute Read

Amazon Increases Its Logistics Capabilities - Should UPS and FedEx Be Afraid?

If Amazon were a country, its net worth would make it the 14th richest nation in the world— just ahead of Spain, Australia, and South Korea. Its value of $1.6 trillion makes it richer than 92% of the countries
James Founding Partner

Save On Your Parcel Costs Today

Get a full-scale analysis of your business and ShipRX exclusive recommended solutions to increase your profits.

Request Your Free Savings Report.

Fill out the form below, and we’ll call you within 24 hours. In a rush? Call now (844) 774-4779

Pop Up Form

  • This field is for validation purposes and should be left unchanged.