Amazon Is Quietly Shipping Non-Amazon Orders To Compete With FedEx, UPS

Summary

Amazon is aggressively expanding its logistics network, aiming to rival FedEx and UPS. With a 50% yearly increase in capacity, Amazon now operates a vast fleet including 400,000 drivers, 40,000 semitrucks, 30,000 vans, and over 70 planes. They are already offering shipping services for non-Amazon orders in the UK and are predicted to launch similar services in the U.S. soon. This move not only enhances Amazon's efficiency but also positions it to capture a larger share of the e-commerce delivery market, potentially offering cheaper and more efficient services than its competitors.

Takeaways

• 🚚 Amazon is aggressively expanding its logistics and shipping capabilities to compete with established carriers like FedEx and UPS.
• 📈 The company has increased its in-house logistics network by 50% year-over-year, aiming to handle third-party shipping.
• 🌟 Amazon now boasts a vast fleet of 400,000 drivers, 40,000 semitrucks, 30,000 vans, and over 70 planes, significantly enhancing its delivery infrastructure.
• 🌐 Starting from scratch in 2014, Amazon has made significant strides, handling 10 billion deliveries with its global transportation network.
• 🏢 Despite still relying on UPS and the Postal Service for a portion of its deliveries, Amazon is reducing this dependency by offering shipping services for non-Amazon orders in the UK.
• 📦 Amazon's logistics expansion is not just for its own products; it's part of a broader strategy to offer shipping as a service to other retailers.
• 💹 The growth in Amazon's logistics is also reflected in its capital expenditures, which have surged to support its shipping ambitions.
• 🛫 Amazon Air, the company's air cargo division, is a key component of its shipping strategy, with a new $1.5 billion air hub in Kentucky.
• 🔄 The company is innovatively using its logistics network to offer services like multi-channel fulfillment, where it stores, packs, and ships orders from other platforms like eBay and Walmart.
• 🌱 Amazon's shipping expansion is part of a pattern of entering and disrupting industries by leveraging its resources, data, and customer base.

Q & A

What is Amazon doing to grow its shipping business?

Amazon is on a spending spree to increase its in-house logistics network by 50% year-over-year and compete with FedEx and UPS by getting into third-party shipping.

How has Amazon expanded its global transportation network since 2014?

Amazon has expanded its global transportation network to include 400,000 drivers, 40,000 semitrucks, 30,000 vans, and a fleet of over 70 planes operating out of its own air hub in Northern Kentucky.

What percentage of Amazon's deliveries does it handle in-house now compared to 2019?

In 2019, Amazon was delivering less than 47% of its own packages, but by 2021, that number has increased to 72%.

How does Amazon's third-party shipping service in the UK relate to its potential US expansion?

Amazon is already offering shipping services for non-Amazon orders in the UK, indicating a strategy that could be expanded to the US, where it could offer similar services to other retailers.

What was the issue with UPS that led Amazon to develop its own global transportation network?

In 2011, UPS couldn't handle the volume of Amazon's online shopping, leading Amazon to decide that it could not rely on third-party service providers for growth and needed to solve delivery issues itself.

What is Amazon's strategy for its logistics-as-a-service program in the UK, and how might it apply to the US?

Amazon's logistics-as-a-service program in the UK allows it to transport cargo and provide shipping services. Researchers predict a similar program could launch in the US within 18 months to a year.

How does Amazon's investment in its air hub in Kentucky support its shipping ambitions?

The new $1.5 billion Amazon air hub in Kentucky, which includes an 800,000-square-foot robotic sort center, allows Amazon to get packages to customers faster and supports its goal of faster delivery times.

What is the Amazon Freight program and how does it benefit sellers?

The Amazon Freight program allows sellers to take advantage of less than load truck space at discounted rates, helping Amazon to fill its trucks and make money on otherwise wasted space while providing cost savings to sellers.

How does Amazon's multi-channel fulfillment service impact the packaging of products sold on other platforms?

Amazon's multi-channel fulfillment service allows sellers to store inventory in Amazon warehouses and have orders packed and shipped out, even for sales not made on Amazon.com, often resulting in Amazon-branded packaging for orders from other platforms.

What is the potential impact of Amazon's shipping expansion on UPS and FedEx?

Amazon's shipping expansion could disrupt UPS and FedEx by offering competitive shipping services, focusing on high-volume routes and package sizes, and potentially even absorbing other shippers as it grows.

How does Amazon's shipping strategy contribute to its reputation for the lowest prices online?

By handling more of its shipping in-house and expanding to third-party shipping, Amazon can achieve economies of scale and cost benefits, which may contribute to lower prices for both Amazon and non-Amazon orders.