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 United States cities.
The Shipping with Amazon service is expected to launch in the coming weeks in Los Angeles and expand to more cities later in the year, says the WSJ, citing unnamed sources. Amazon is piloting a new service called "Shipping with Amazon" (SWA), an indication that the e-commerce giant is moving closer to becoming an integrator in its own right, reports the WSJ.
Amazon, which has been introduced and competes in different sectors such as retail, food, or pharmaceutical industries, among ors, has always been expanding its business in parcel market.
As is often the case for Amazon, the ace in the hole for SWA may be the price. Since it already delivers some of its own packages, Amazon can fill extra space in its trucks with more packages, which won't add to the overhead.
The program seems to mesh with Amazon's efforts to build up its own shipping infrastructure so it can handle the growing mountains of packages it needs to deliver. Amazon accounts for less than 10 percent of total revenue for UPS and 4 percent of revenue for FedEx, according to Wolfe Research analyst Scott Group.
Cowen analyst Helane Becker wrote in an investor note Friday that worries about Amazon's push into the shipping world were "somewhat overblown", saying the complex delivery networks of FedEx and UPS were "highly hard to replicate".
Still, Amazon has no problem taking a loss on initiatives if it thinks it can capture market share in the process, so don't be surprised to see it take the same approach here.
DHL's On Demand Delivery service created to reduce failed delivery attempts and improve the receiver experience has successfully been deployed across all countries in the Americas.
Analysts estimate that UPS gets up to 6 percent of revenue from Amazon deliveries compared to about 3 percent for FedEx.
Citi analyst Christian Weatherbee said Amazon hasn't yet committed significant assets to a new delivery program.
However, UPS will continue to be Amazon's partner.
"We have a full fleet of logistics services", McMillan said. UPS declined to make an executive available for an interview.
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. The hedge fund run by Robert Bishop held 159,764 shares of the air freight and delivery services company at the end of 2017Q3, valued at $36.04 million, down from 193,791 at the end of the previous reported quarter.