Consumers ordering from Amazon.com often assume Amazon itself is delivering the packages, because of the branding on the boxes. But Amazon is teaming with USPS, FedEx and UPS to send the packages — at least for now.
“So Amazon the company, not the river, seems to have outgrown its relationship with the postal service, FedEx and UPS,” says John Hockenberry, host of “The Takeaway” on WNYC Radio and PRI, during Tuesday’s broadcast.
“Impatient over service lapses, Amazon Founder Jeff Bezos — who has his own rocket company — may be interested in amassing his own fleet of planes, trains, trucks and drones to deliver goods. That would make Amazon a full-blown global logistics company. Internal Amazon documents reveal the plan for a global delivery network that would control the flow of goods from China to the U.S.”
Amazon could take over its deliveries in the next 18 months, according to the show.
This could be a blow to USPS, which has been touting the growth in its package deliveries, even as its previous workhorse — First Class letters — diminishes. However, a USPS spokeswoman said Tuesday said the postal service has no comment. UPS has extensive comments at the end of this article. A spokesperson from FedEx didn’t immediately return Target Marketing’s request for comment Tuesday afternoon.
One of the main motivators for this initiative may be that American consumers expect, not just appreciate, but expect fast and free package delivery, says John Wells, a professor of management practice at Harvard Business School and former CFO for PepsiCo and Frito Lay, when speaking to Hockenberry on Tuesday.
This type of delivery will probably be done by private contractors who are rated by the public on their performance, like Uber drivers, Wells says.
“A 2013 report to Amazon’s senior management team proposed an aggressive global expansion of the company’s Fulfillment By Amazon service, which provides storage, packing and shipping for independent merchants selling products on the company’s website,” according to a Feb. 9 article in BloombergBusiness. “The report envisioned a global delivery network that controls the flow of goods from factories in China and India to customer doorsteps in Atlanta, New York and London. The project, called Dragon Boat, is proceeding, according to a person familiar with the initiative, who asked not to be identified because the information isn’t public.”
But Bloomberg article writer Spencer Soper says Amazon’s expansion may not end there. Beware, bankers.
“If the logistics business takes hold, financial services could follow,” he writes, “with Amazon giving loans to merchants, processing international payments and consulting its network of sellers on customs and tax matters. The strategy echoes the company’s move into cloud services, which it developed internally and gradually expanded into a commercial enterprise that’s now Amazon’s fastest-growing and most profitable division.”
The following comments come from Susan Rosenberg, UPS Public Relations Director:
While we appreciate John Wells’ comments, UPS has unrivaled scope, scale, innovation and delivery density, combined with an extensive transportation network that serves more than 220 countries. Customers or competitors are challenged to replicate the value from our many services combined with the trust and predictability of UPS service providers who are on routes day after day.
Amazon is a very good customer for UPS, and we have a good relationship with them.
UPS already offers same-day delivery for urgent deliveries, typically involving healthcare or critical service parts deliveries. These deliveries often involve products that are regulated and have extensive chain-of-custody and time-sensitive requirements. Because e-commerce transactions more frequently occur in the evening, deliveries are often fulfilled through omni-channel strategies that provide retailers with cost-effective ways to ship faster and better use their physical store inventories. Deliveries can be processed late in the day and then scheduled for the next day.
We continue to study the same-day marketplace. In fact, we recently made an investment through our UPS Strategic Enterprise Fund into Deliv, a same-day delivery company primarily serving retailers (www.deliv.com). These investments aim for knowledge returns and give us insight into companies that have innovative business models or operate in adjacent market segments of interest. It’s a way to learn as markets evolve. The Deliv model provides an even greater opportunity for retailers to use their stores as delivery hubs to avoid building more distribution centers. It is a way that retailers with brick-and-mortar stores counter born-on-the-Web competitors.
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