FedEx and UPS the latest companies to be threatened by the retail juggernaut
Once, when you ordered a package via Amazon, it would arrive in the mail or via a delivery service like UPS. Now, it’s increasingly likely that your Amazon package will be delivered by, well, Amazon. A new report at The Verge notes that Amazon is now delivering around half of its own packages, compared to 20% a year ago.Related, at Forbes
At The Verge, Nick Statt writes that Amazon’s foray into logistics can be seen as a continuation of their ongoing efforts to control all aspects of someone’s order online: not simply packing it and shipping it, but potentially handling all steps involved, from manufacturing or printing something to getting it to its recipient directly.
As it turns out, building out a rival to two of the largest shipping companies out there doesn’t come cheap:
The company said in October that in the three months spanning June to September, it spent 50 percent more — an eye-popping $9.6 billion — on fulfillment alone, due both to one-day Prime shipping and the general expansion of its retail operation in the US.Statt’s article also notes the effect of Amazon Prime shifting from two-day shipping to one-day shipping....MORE
Amazon Blocked Sellers From Using FedEx And Now We Know Why
Earlier this week, Amazon announced that sellers on its site will not be permitted to use FedEx for deliveries to Amazon Prime customers. The Wall Street Journal reported a “decline in performance” as the reason for the change but Amazon did not give specifics about what that decline was.Now we know. A supply chain software company called Convey has done an analysis on 2.5 billion shipping events relating to tens of millions of packages shipped from over 500 thousand locations since Thanksgiving and the results are troubling to any FedEx shareholder: FedEx on-time delivery performance has dropped to 68.3% from 77.5% in the same period in 2018. And FedEx is not alone.
The same analysis shows UPS’ on-time stats are down too, from 86% to 80%. Most likely, the increase in the number of packages and the higher percent going to consumers’ homes is overwhelming the companies’ systems and accounts for the decline in on-time performance.
Although these poor performance numbers from FedEx and UPS are bad for Amazon’s customer service in the short-term, this may be a big opportunity for Amazon in the longer term. Amazon is now leaning on these poor performance numbers to continue to build its own delivery business........MORE
And at MarketWatch this morning:
FedEx stock may have bottomed, but that’s not a good enough reason to buy, analyst says
Another earnings miss sends shares tumbling, prompting a downgrade and multiple price-target cuts
This may be another anti-trust problem for Amazon. I shall make inquiries directly.
