In 2014, Amazon delivered about 0.2% of all us packages. Today, Amazon controls a fifth of the delivery market and is on track to overtake UPS and even the US Postal Service (USPS), according to Pitney Bowes logistics company data.
Data released in sept. shows that the e-commerce giant has ousted FedEx as the third-largest package courier in the US, and is behind UPS, the only private company that still delivers more packages than Amazon.
Amazon used to rely heavily on FedEx and UPS to deliver packages to its customers. But the company changed his strategy after a disastrous 2013 Christmas shopping season in which delivery services were unable to keep up with the flood of gifts American shoppers were ordering from Amazon, leading to widespread delays. The following year, Amazon accelerated the construction of its own distribution centers and began accumulating fleets of semi-trailers, cargo planes, and delivery vans. Since then, Amazon has increasingly shifted its deliveries from FedEx and UPS to its internal logistics operation.
Until now, the e-commerce giant has focused on delivering its own packages. But the explosive growth suggests that Amazon could soon enter the delivery market. Analysts believe Amazon is poised to launch an independent delivery service in the US in a few months. The new unit would compete with UPS and FedEx by delivering packages for outside companies, putting more pressure to do a routine two-day or same-day delivery.
Amazon Logistics is poised for explosive growth
Amazon Logistics, the delivery division of the e-commerce company, has already grown enough to meet most of the company's internal needs; Is now handles two-thirds of Amazon package deliveries. But even so, Amazon has dramatically increased your spending on logistics infrastructure. It is buying dozens of cargo planes, opening multi-million dollar freight handling facilities, and hiring 125,000 new delivery drivers and warehouse workers In the USA.
In the eyes of Morgan Stanley analysts, that's strong evidence of Amazon's delivery business. will be released in 18 months. In fact, Amazon is already quietly Handling some packages for the US Postal Service., its biggest competitor in the US delivery market.
If Amazon opens its delivery services to more outside companies, the company can leverage billions of dollars in internal investments in logistics, just as it did when Amazon Web Services was spun off into a tremendously profitable subsidiary.
So far, Amazon Logistics has failed to catch up with its US parcel delivery rivals in terms of revenue. But that may only be because it offers below-market rates to its main customer, its parent company Amazon. Amazon Logistics raises about $ 4.28 in revenue for each package it delivers, compared to $ 12.19 for UPS and $ 17.95 for FedEx, according to Quartz analysis of Pitney Bowes data.
Since your market business subsidizes your delivery infrastructure, you can afford to keep prices low while making a profit. Assuming Amazon raises shipping prices for external customers, the e-commerce giant may be the market leader in another industry.
