Amazon Shipping: should UPS and FedEx be worried?
Wasn't this in the works previously?
Amazon Shipping is nothing new; it was originally set to launch in February 2020. However, the e-commerce boom of the pandemic altered the tech company's plans as it focused on meeting the demands of shoppers stuck at home.Over the years, Amazon relied on UPS and FedEx to supplement its delivery network. In 2019, FedEx ended its ground delivery relationship with Amazon, and now, Amazon is pulling back from UPS. It made up 13.3% of UPS's yearly revenue in 2020 but only 11.3% in 2022 as the tech company brings logistics in-house.
Amazon spokesperson Olivia Connors said, "We've been providing this service for a while with positive feedback, so we're now making it available to more selling partners." After a summer marked with UPS uncertainty over the potential Teamsters strike and price hikes on the horizon for both carriers, the timing could not be better for an alternate shipping solution to go to market.
What is deferred delivery?
While Amazon has made a name for itself with fast Prime delivery, this new service is slowing things down. Its deferred delivery offering guarantees ground delivery of non-urgent parcels within five days. Deferred delivery optimizes less-than-truckload shipments, saving shippers and carriers money by avoiding multiple stops at the same destination and sending only full truckloads.Unlike its Fulfillment by Amazon program, which includes warehouse storage and delivery, the new Amazon Shipping service bypasses any warehouse storage, offering only a domestic shipping service.
Who can use the Amazon Shipping service?
At FedEx/Citi's 2023 Global Industrial Tech and Mobility Conference in February 2023, FedEx President and CEO Rajesh Subramaniam said, "Amazon is delivering their products for the most part... But trying to compete directly in our sphere is going to be very, very difficult." However, direct competition is not inconceivable.The Amazon Shipping service will undoubtedly compete with other carriers, like UPS and FedEx, but the potential customer pool is much smaller for Amazon Shipping. At this time, Amazon Shipping is only available for businesses that sell on Amazon.
Despite this, both UPS and FedEx experienced a dip in stock values after Amazon's big announcement.