Amazon set to launch own delivery service, competing with UPS & FedEx

Amazon is reportedly kickstarting "Shipping With Amazon," or SWA, a delivery service for other businesses that will take on industry leaders UPS and FedEx.

SWA will launch in Los Angeles within the next few weeks, initially servicing merchants that do business through Amazon.com, Wall Street Journal sources said on Friday. Some of the people indicated that it could expand to more cities by the end of 2018.

Amazon will allegedly try to undercut UPS and FedEx on pricing, which could shake up the parcel industry if the company can scale infrastructure. The company has been gradually moving into self-run deliveries by hiring drivers, setting up air cargo, and delving into ocean freight. It has even been toying with in-home deliveries for people willing to pay for a special lock and camera setup.

Apple currently relies on both UPS and FedEx for U.S. deliveries, and might be tempted to add Amazon to the mix if it will lower overall costs. At the same time, that would funnel money towards a chief competitor.

The two companies are increasingly stepping into each other's territory. Most recently Apple has entered the smartspeaker space with the HomePod, and laid the groundwork for a 2019 TV slate that could challenge Amazon Prime Video.

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59 Comments

emig647 2446 comments · 20 Years

About 6 years ago

Competition is good. Be interesting to see where this goes. I feel like shipping prices from some of these places are a bit out of touch.

zoetmb 2653 comments · 17 Years

I just heard a news report on this. According to what I heard, it's only for overnight shipping. What percentage of people pay for that today (aside from businesses)? And that's a huge capital and labor cost for Amazon - I expect they'll lose money on this for years to come. But I suppose if they can get other companies to use the service, it covers the cost of trucks and labor that they're already investing in anyway.

macgui 2360 comments · 17 Years

No doubt Amazon will workout scheduling and routes that work to their best advantage with as little 'loss leader' as possible.

I use Prime and Amazon Locker as much as possible but often Prime products get marked 'Not available to be shipped to your address' so I have to use a street address which isn't convenient. But Amazon will dot every i and cross every t possible.

I think it was Mac Connection years ago that sent every order, no matter how small, by FedEx overnight. Great while it lasted, but it couldn't.

zroger73 787 comments · 13 Years

My rural mail carriers sometimes can't fit all the packages in their personal vehicles, so the packages get delivered the next day.

UPS will sometimes run behind and claim that "the receiving business was closed" (my address is residential) and deliver the next day.

The good thing is that I rarely have to pay for Amazon Prime as a result. Every time a delivery is late, Amazon gives me either a discount or a free month of Prime. I don't mind waiting an extra day for a package to arrive.

Soli 9981 comments · 9 Years

emig647 said:

Competition is good. Be interesting to see where this goes. I feel like shipping prices from some of these places are a bit out of touch.

1) How do you gauge that the cost of shipping an item across the country or around the world in 2 days as being "out of touch"? How would you gauge the price if you have no idea how much cargo planes, commercial jets with some cargo area, OTR trucks, local trucks, sorting facilities, and all the other infrastructure and personnel that goes into getting a package from A to B over an incredibly complex network, over a massive distance? I've studied this and I couldn't begin to claim any such thing.

2) Have you considered how many packages Amazon ships through these services? Are you familiar with economies of scale? What if Amazon pulling out of, say, UPS, means they can't pack transport vehicles to the same extent, or if revenue goes down that they have to close stores and other facilities, lose staff, or cut hours of operations to try to stay in the black? What if this results in having to raise prices because they've lost their largest customer, and one that kept things moving through the channel, so now you not only have higher costs, but also slower delivery and worse customer service? Think of what Amazon has done to the B&M stores. You'd think that they'd have great customer service since it's the one thing they can offer that Amazon can't, and yet Amazon's chat-based CSRs have been great and going into a Staples has been a nightmare, IMO.