UPS indirectly tried to one-up Amazon after it tested unmanned aerial vehicles, or drones, and their ability to work hand-in-hand with their normal supply chain processes. It launched Amazon Flex, which uses independent contractors driving their own vehicles to deliver packages from Amazon shipping hubs, guided by a smartphone app.
Amazon is running "Shipping with Amazon" in Los Angeles and possibly other locations, a person familiar with the matter told Reuters on condition of anonymity.
In recent years, Seattle-based e-tailer Amazon has doubled-down on the expansion of its supply chain and fulfillment infrastructure, launching a dedicated freighter network, and enlarging the reach of its own-operated last-mile delivery services to include some 37 U.S. cities. UBS Group raised FedEx from a "neutral" rating to a "buy" rating and increased their price objective for the stock from $264.00 to $302.00 in a research report on Friday, January 5th.
Amazon already delivers packages in a number of cities in the United States, so this isn't a completely new area for the company. Amazon would then be able to take the packages they pick up from vendors directly to consumers in the 37 cities where they now make deliveries according to the report.
The Wall Street Journal says the online retail giant is planning to roll out "Shipping with Amazon" in Los Angeles within the next few weeks.
Secondly, if Amazon starts offering delivery to businesses, it will likely do this at a reduced rate.More news: Jobless Rate Down, Labour Participation Rate Up In Windsor
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Since Amazon isn't looking to compete with big names like UPS and Fedex just yet, that's exactly the reason why it's starting small by introducing Shipping with Amazon.
Striking mortal fear in business sectors en masse has become Bezos' most fun superpower.
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. Amazon shares were little changed.
The Journal said Amazon also wants to undercut its competitors on pricing, an indication that the company is willing to lose money for several years in order to gain an edge. The thing to keep in mind here is that it will initially be restricted to companies selling goods on Amazon's own marketplace. UPS was down more than 6pc in early trading Friday, while FedEx dropped 5pc.
UPS and FedEx have the ability to raise prices and upend Amazon's cost structure. Currently, UPS shares are down over 3%, while FedEx is seeing a drop of almost 4%. UPS said last week it plans to spend $7 billion on upgrading its network this year alone. "We believe Amazon is UPS's largest customer, and would be more impacted by a loss of volume".
So, while it is not yet possible to login to Amazon and schedule a package pickup and subsequent delivery, that day seems to be on its way. "This leaves delivery firms with the unattractive prospect of losing share in their most lucrative and profitable markets, while at the same time having to offer a national service with all the expense of delivering to rural locations", Saunders warned.