Amazon Is Said to Test Delivery Service to Rival FedEx, UPS
Comment of the Day

October 06 2017

Commentary by Eoin Treacy

Amazon Is Said to Test Delivery Service to Rival FedEx, UPS

This article by Spencer Soper for Bloomberg may be of interest to subscribers. Here is a section:


Last year, Amazon introduced Seller Fulfilled Prime, which lets merchants who don’t stow items in Amazon warehouses still have their products listed with the Prime badge, meaning they’ll be delivered within two days. The merchants had to demonstrate they could meet Amazon’s delivery pledge, and many used UPS and FedEx for deliveries. The new service gives Amazon control over those deliveries instead, even if it continues to use third-party couriers.

Amazon has started looking beyond its own warehouse network to give shoppers quick access to an abundant assortment of goods. Its Fulfillment by Amazon offering already lets merchants ship goods to Amazon warehouses around the U.S., where they can be stored, packed and shipped to customers. That centralized approach can create logjams, particularly during the busy holiday shopping season.

Seller Flex would also give Seattle-based Amazon more visibility into the warehousing and delivery operations of its merchant partners, potentially helping it make full use of their product inventory, storage space and proximity to customers while still guaranteeing quick delivery.

Eoin Treacy's view

Mrs.Treacy’s Amazon business was invited onto Seller Fulfilled Amazon yesterday so I will inform subscribers of how that works out once we have some experience of it.

An additional lesson, having now developed personal experience of selling on Amazon, Ebay, Wal-Mart and Etsy, is that Amazon’s marketplace is infinitely more accessible from a seller’s perspective and sales dwarf all other platforms combined; at least for the products Mrs. Treacy sells. That hammers home the point of just how dominant a position Amazon has in online retail.

Meanwhile the rollout of Amazon logistics operations represents a challenge for UPS, in particular, since Amazon accounts for such a large proportion of its business. The share has paused in the region of the 2016 high and some additional consolidation looks more likely than not.

Fedex has been rallying in a consistent manner since early last year and is now pausing in the region of the June peak. It does not have nearly the same reliance on Amazon as UPS does so it should not be as affected by Amazon’s forays into logistics.

Amazon continues to pause in the region of the psychological $1000 and is currently firming from the region of the trend mean. 

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