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Amazon trials their own shipping service

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  • Feb 12th, 2018 9:29 pm
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Feb 10th, 2018 11:03 am
mbg [OP]
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Feb 10th, 2018 11:03 am

Amazon trials their own shipping service

Not quite the same as Amazon delivering some of their own packages with their own drivers, but I imagine it's an extension of that. This service will serve non-Amazon businesses/warehouses who sell through Amazon.

This will be interesting because while shipping operations can be made more efficient to some extent, a lot of the costs are in vehicles, fuel, and drivers. I'm sure they can squeeze out a few efficiencies here and there (I'm sure drivers will get the short end of that stick, given Amazon's general labour practices concerning the lesser-skilled jobs), but UPS, FedEx, etc. are already very efficient operations.
According to a report by The Wall Street Journal, the online retailer's new shipping service, named "Shipping with Amazon" (SWA), will roll out in Los Angeles in the coming weeks. With SWA, Amazon will pick up packages from businesses and ship them to customers, relying almost entirely on Amazon's shipping infrastructure.
source: https://arstechnica.com/information-tec ... th-amazon/
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Feb 10th, 2018 11:25 am
MoneyHypeMike
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Feb 10th, 2018 11:25 am

Hopefully, they don't lose money on this service.
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Feb 11th, 2018 12:55 am
TheGreatGazoo
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Feb 11th, 2018 12:55 am

Freight has to be one of their largest expenses so not surprising they are trying it out to see if they can pull it off. It makes sense in big markets.
Feb 11th, 2018 9:48 pm
djeffery
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Feb 11th, 2018 9:48 pm

TheGreatGazoo wrote: ↑ Freight has to be one of their largest expenses so not surprising they are trying it out to see if they can pull it off. It makes sense in big markets.
They have been doing some of their own deliveries for a few years in larger centers. Where it will bite them is if they do too much of their own stuff in the easy areas like big cities, then their shipping costs are going to go up in the outlying areas. The delivery companies won't do the small towns as cheaply if they don't have the large cities, which are much more efficient, making up for the lower profitability in smaller centers.
Feb 11th, 2018 9:55 pm
djeffery
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Feb 11th, 2018 9:55 pm

Delivering their own deliveries is one thing. Picking up from business A and delivering to business B starts to get rather cost intensive. Now you need to have sort facilities, local terminals, and highway and air linehaul operations. And yes I know, Amazon has some planes. A couple dozen. Fedex has about 700. DHL is the largest shipping company in the world and they lost their shirt trying to enter the US market. And that was after acquiring an existing courier company with a network in place. Amazon isn't going to finance replicating a Fedex network on saving what they pay Fedex to move parcels for them.
Feb 12th, 2018 9:29 pm
mbg [OP]
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Feb 12th, 2018 9:29 pm

djeffery wrote: ↑ Delivering their own deliveries is one thing. Picking up from business A and delivering to business B starts to get rather cost intensive. Now you need to have sort facilities, local terminals, and highway and air linehaul operations. And yes I know, Amazon has some planes. A couple dozen. Fedex has about 700. DHL is the largest shipping company in the world and they lost their shirt trying to enter the US market. And that was after acquiring an existing courier company with a network in place. Amazon isn't going to finance replicating a Fedex network on saving what they pay Fedex to move parcels for them.
They are probably treating this like R&D. Would not be surprised if someone at Amazon thinks they really will be doing drone deliveries In a couple of years and that this is a way to pave the way for that, business-wise.

No harm in trying, if you have the type of loss-tolerant investors that Amazon has.

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