Amazon to Launch Delivery Service That Would Vie With FedEx, UPS

[dalton99a]

https://www.wsj.com/articles/amazon-to-launch-delivery-service-that-would-vie-with-fedex-ups-1518175920
Amazon to Launch Delivery Service That Would Vie With FedEx, UPS
The company is preparing to begin the offering in Los Angeles with its ‘third-party merchants’ and then roll it out more broadly
By Laura Stevens
Feb. 9, 2018 6:32 a.m. ET

Amazon.com Inc. AMZN -1.87% is preparing to launch a delivery service for businesses, positioning it to directly compete with United Parcel Service Inc. and FedEx Corp.

Dubbed “Shipping with Amazon,” or SWA, the new service will entail the tech giant picking up packages from businesses and shipping them to consumers, according to people familiar with the matter.

Amazon expects to roll out the new delivery service in Los Angeles in coming weeks with third-party merchants that sell goods via its website, according to the people. Amazon then aims to expand the service to more cities as soon as this year, some of the people say.

While the program is being piloted with the company’s third-party sellers, it is envisioned to eventually be opened to other businesses too, according to some of the people. Amazon is planning to undercut UPS and FedEx on pricing, although the exact rate structure is still unclear, these people said.

[hlthe2b]

1. hmmm... I know when I tried to sell something on Amazon as a (rare) 3rd party seller,

the amount they were going to ALLOW me to charge for shipping, versus what it was going to cost ME, was unbelievable. I basically was going to be paying someone to take my merchandise, which I later sold on ebay for a small profit even after shipping.

I guess this is probably in response to that, but it surely isn't going to be good for UPS, FedEx or USPS.

[politicaljunkie41910]

5. Sounds like Jeff Bezos doesn't want anyone to any money but him. Geez I'm starting to hate Amazon.

[Cicada]

13. It will probably improve deliveries for consumers. Amazon takes over for a good reason

So far Amazon has been great for consumers, selling stuff without trying to make a profit. It is thought to be deterrence to inflation - no one can raise prices without fear of losing out to Amazon. That is a good thing. The problem is what happens when Amazon finally makes the transition to being a for profit firm. But that is years away. At that time they could, if they want, sell at higher prices than is appropriate because they will have become too big to compete against.

But for now Amazon is great for consumers. But very very bad for less efficient firms trying to compete with them.

[dalton99a]

14. Amazon Reports Biggest Quarterly Profit Of $1.9 Billion

https://www.npr.org/sections/thetwo-way/2018/02/01/582523404/amazon-reports-biggest-quarterly-profit-of-1-9-billion

In the last three months of 2017, Amazon saw its profit more than double to reach a record of $1.9 billion. The company's sales continued to soar during the holiday quarter as more people signed up for its fast-delivery Prime program and bought its voice-activated device Echo.

Company executives touted the sales of the devices powered by its voice assistant Alexa. Amazon also said millions of people shopped by using their voice last year. Without disclosing specific numbers, CEO Jeff Bezos said of Alexa sales: "We don't see positive surprises of this magnitude very often — expect us to double down."

Amazon said its profits also got a boost from a tax benefit of about $789 million thanks to the new tax law passed in December. And the company noted big contributions from its advertising business and the cloud-computing service known as Amazon Web Services.

[Cicada]

16. Profit is solely from non retail businesses

In quarter 4 Amazon had a loss from retail operations. It’s overall profit came from its web services business. Amazon store continues to be a not for profit (now) business. They work to increase market share and efficiency. For now.

[politicaljunkie41910]

15. I've bitched about Amazon here before and I'll do so again. I hate Amazon. I majored in Business

and Accounting, and have worked in auditing and finance all my life so no one needs to tell me about their business model. My problem with them is that there are a number of things that I used to be able to buy locally from CVS, Walgreen's, and Rite Aid, that I can now only get from Amazon. I have to pay for shipping and wait for delivery when I want it NOW, not a week from now. When you add the shipping costs, it nullifies the lower cost Amazon charges. Also, once you can only get something at Amazon, they are at liberty to charge what they want for it. There are products that I use to buy from small businesses in my local area that have been taken over by Amazon, and then Amazon raises the price on it. I know I can't blame Amazon for that, but there is a reason that monopolies aren't allowed to exist. They eventually drive all the competition out of business, and then raise prices.

They come into blighted communities, demand sweetheart deals to set up shop, and provide jobs that don't pay a living wage, or health and retirement benefits, and if they do they are so costly, their average employee can't afford them, or their people end up trying to survive on food stamps even thought they work full time. Jeff Bezos is one of the richest men in the world. His goal is to drive everyone who dare compete with him out of business. This is wrong on so many levels.

[Cicada]

17. So far Amazon has helped consumers

You are not required to pay more for amazon plus shipping if it exceeds the CVC cost. I buy from Amazon because it costs less including shipping than the cost of gas, time and local store price. And CVC keeps its prices lower because of Amazon. People do not understand how expensive driving is. I have no doubtAmazon provides me with huge savings overall. The costs you mention are small.

Maybe someday they will be able to cause consumer harm. Maybe. But maybe not. And right now their exploding growth proves they deliver great value.

[redstatebluegirl]

2. They are worse than Walmart for mainstreet.

They won't pay their people a living wage and will work them to death. Once they have destroyed Fed EX and UPS, put all of their hardworking people out of decent paying jobs, they will raise prices. This company is NOT good for America.

[MineralMan]

3. Sounds like another way to take money from independent Amazon merchants.

They already take quite a bit, so why not go for more? A lot of small businesses use Amazon to put items in front of consumers. The price competition is really fierce between competing independent Amazon vendors, and Amazon's fees draw down profits in a serious way. Adding a shipping fee might drive many right out of business.

Plus, if you're an independent vendor, there's always the chance that Amazon will compete directly with you and offer Prime services for the same products you sell. It can be a nightmare.

[NCTraveler]

4. Wonder how many of these Amazon deliveries....

Will be done after hours with little jeeps that say USPS on the side. That is currently a common thing in the area I live. Every single Sunday I see at least one USPS delivering person dropping off Amazon items, to my house or a neighbors. One Sunday there were three USPS delivery vehicles on my street dropping off Amazon packages at the same time. Kind of a head scratcher.

[FSogol]

6. USPS stopped using Jeeps in the late 90s. They use LLV step-vans manufactured by Grumman.

(I recently renovated a postal VMF)

PS. LLV stands for Long Life Vehicle.

[NCTraveler]

7. That is why I didn't capitalize "jeep".

I knew it wasn't the brand they were using.

I wasn't aware of who they were using. Thanks for passing it along.

I hope your renovation went well. That is awesome. I have a number of antiques that I slowly restore but nothing along the size of a vehicle.

[FSogol]

8. The mentioned renovation was work related, I'm a mechanical engineer at an AE firm.

A VMF is a Vehicle Maintenance Facility. We designed a replacement of HVAC system, roof, and windows.

Sorry for the misunderstanding.

[TheCowsCameHome]

9. I'd think they would outperform UPS.

UPS is a five day a week operation.

[procon]

10. ... and one store ruled the world.

It's not unimaginable to foresee a not so distant future where Amazon is the only store available for everything. Amazon went online as a bookseller in 1995, and now look at the range of products they sell. Imagine how big they'll be in the next 20 years.

[BumRushDaShow]

11. They have pretty much begun to transition to that

for their own deliveries. This past year, most of my Amazon purchases have now been delivered by their "AMAZL_US" for items they fulfill (and which consists of their own people with occasional use of private operators working for Amazon - other than the A1 or Lasership that they have utilized in the past). They have even enabled GPS in some of their vehicles to mirror what UPS has been doing the past year with the "Follow My Delivery" link to see where the truck is.

What I have observed these delivery people doing is using an app on their own phones to transmit the delivery status (vs UPS or USPS or FEDEX that have company equipment).

[matt819]

12. Not saying it can't be done, but. . .

Take a look at this info from UPS: https://pressroom.ups.com/pressroom/ContentDetailsViewer.page?ConceptType=FactSheets&id=1426321563187-193

Note the number of planes (owned and leased) and the number of vehicles worldwide.

Can Amazon replicate this? Who knows? Maybe.

Add in the FedEx resources and those of the USPS, and I'm not sure it's worth the trouble. But, hey, I'm not the richest guy in the world, so what do I know?

As a shipper (hey, I'm also an Amazon merchant), there's some comfort in knowing that I can get my package wherever it needs to be in the world using UPS, FedEx, and the USPS. I don't have to wonder whether they operate there, wherever there is. Sure, I have to factor in costs and shipping times, but if I want to send a package to a remote town in Australia, I really don't have to think twice about whether it will get there. And until SWA can assure me of that resource at a competitive price, I'm not going to give this much more thought.