The service, entitled "Shipping with Amazon," is expected to be launched in Los Angeles for independent merchants selling products on Amazon websites. It is expected that it will also be expanded to more cities and external businesses in the future.
However, analysts pointed out that in the future to be able to package delivery services to other retailers and consumers across the United States, Amazon will need to invest tens of billions of dollars. It also requires thousands of cargo trucks and hundreds of aircraft, as well as thousands of sorting centers to handle millions of packages a day.
According to MWPVL International, a supply chain consultancy, Amazon now only hires 40 aircraft and has about 300 warehouses in the United States, including distribution centers, sorting centers and distribution stations. Analysts said the company is now primarily a leasing contract with the delivery courier company rather than owning those assets, which is a limiting factor.
Two major logistics giants have a huge advantage compared to Amazon. UPS has been involved in the logistics industry for more than a century before entering the Ford T-model. FedEx has also been in the field for more than 40 years.
FedEx now has about 650 aircraft, 150,000 trucks, 400,000 employees and 4,800 worldwide operations and processes about 12 million cargoes per day. UPS business volume is larger, handling more than 20 million packages per day, serving more than 220 countries and regions. Its cargo fleet includes over 500 self-owned and leased aircraft, more than 100,000 package wagons, and other vehicles that package deliveries.
According to MWPVL International, Amazon shipped about 1.2 billion U.S. domestic shipments last year. However, most of these are delivered through US Postal Service, UPS and FedEx.
"Even if Amazon starts to reach a certain level, UPS and FedEx's last mile business is at risk, and they will not suffer much because of the low return on the business, which we believe is having a very low profit margin ... So losing some of the last mile's business may not be a bad thing, "Grupp added. Amazon involved in the distribution area, may also urge the two logistics giants to raise prices, because Amazon still rely mainly on them to deliver parcels.
After completing a day's cargo handling mission, Amazon drivers can ship parcels to their vehicles in third-party sellers' warehouses. Then, those outbound packages can be shipped to the regional sorting center and then to other markets by truck or plane.
Waufrat said, "They threw 30 parcels on the truck, and then he (the driver) returned to his starting point of dispatch, and now those parcels are entering the Amazon ecosystem."
Amazon further distribution areas, will exacerbate market competition. At the moment, competitors in this space include both established logistics companies and regional and start-up companies trying to find ways to deliver parcels home.