Logistics and Shipping War on the Rise

For years now, Amazon.com, Inc. (NASDAQ: AMZN) has been implementing more groundwork for its own logistics and delivery network, one that today only ship and delivers Amazon orders, but someday hopes to do much more in a direct dispute to UPS, FedEx, and the U.S. Postal Service.

Amazon is now revealing a program meant to give an opportunity to create hundreds of new package-delivery business that can help the Company handle the fast growth that it’s been experiencing. Amazon claims that this program will offer new partnering delivery companies discounted rates on everything from fuel to vehicle insurance to delivery vans, coaching from Amazon, and an app to guide delivery people on which order should be dropped off when.

Amazon is also launching its own Amazon-branded delivery vans that partnered companies can lease and uniforms that delivery partners can use to outfit their drives. It stated that new partners can start up their business for as low as USD 10,000, which is an amount that Amazon will reimburse to businesses founded by U.S. military veterans. Although this seems like a big move for Amazon, it comes with massive challenges the Company has to overcome to have enough delivery capacity to keep up with the growth of its business. It has already partnered with small and mid-sized delivery companies across the country, and even after it partnered with UPS and the U.S. Postal Service, the Company claims it needs more help.

At the same time, the emergence of Amazon-branded delivery vans and uniforms could give credibility to all the reports about Amazon’s long-term goal being to directly challenge the major parcel delivery companies like UPS and FedEx. Most importantly, the more volume of packages that is being ran through a delivery system, the more efficient that system will have to be. Amazon realizes this issue, but each time it introduces a new delivery plan, like Amazon Flex, which allows people to deliver Prime Now packages for the company, it says the same thing every time: “We’re not looking to replace the big delivery companies, but rather supplement what they do.”

Amazon claims that these delivery partners can make deliveries for other companies too, but not if they plan on using its Amazon delivery vans. Therefore, the message Amazon is trying to portray is that if companies decide to work with Amazon, they should prioritize the company. Amazon’s e-commerce growth seems like it will be enough to fuel long-term growth and expansion in the new delivery companies that Amazon is trying to help start. However, it seems just as likely that Amazon vans will one day be carrying packages from other companies as well as its own.

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