WHAT’S BEING CLAIMED:
- According to The Wall Street Journal, Amazon is getting ready to start its own delivery service for its retail business.
- UPS has been handling most of Amazon Prime deliveries from third-party sellers.
- But handling deliveries themselves can shorten delivery time and encourage more people to be Prime members.
Online retail giant Amazon is gearing up for its next venture, its own delivery service.
The service is called, “Shipping with Amazon.” Initially, it will pick up packages from its own third-party sellers and deliver them to shoppers.
Operations are reportedly scheduled to start in the coming weeks in Los Angeles and hopefully, expand from there. Reports of the upcoming business sent FedEx and UPS shares to drop in Friday’s early trading.
Amazon’s delivery service would compete directly with UPS, FedEx and even with the U.S. Postal Service.
Its long-term relationship with UPS is not likely to break instantly, but eventually, it will cool off.
Amazon officials told Fortune, “We’re always innovating and experimenting on behalf of customers and the businesses that sell and grow on Amazon to create faster lower-cost delivery choices.”
The company has been shipping items from its own warehouses but issues about Prime membership arise when customers order from third-party sellers.
The new venture will likely increase Amazon Prime membership because it can track deliveries on its own and avoid problems when customers say they never received what they ordered.
CEO and founder Jeff Bezos wants the company to be involved in all facets of the sales process. “By bringing delivery in-house for third-party partners, it doesn’t have to worry about partner service interruptions and how packages are handled.”
The retail company had big losses on shipping last year when its expenses reached nearly $20 billion. It will definitely control shipping costs by having in-house delivery service.
Amazon can eventually expand its shipping business and not just cater to its shoppers. There’s money in the shipping industry. Take, for example, UPS, which reported revenues of $18.83 billion from the latest quarter.