
Amazon Is Testing Its Own Delivery Service to Rival FedEx and UPS - SREinSF
https://www.bloomberg.com/news/articles/2017-10-05/amazon-is-said-to-test-own-delivery-service-to-rival-fedex-ups
======
rgbrenner
Amazon now has 43% of all ecommerce sales... Shipped: 30% UPS, 30% FedEx, and
40% USPS.

This article says Amazon accounts for $1B of UPS 60B revenue -- only 1.67%[0].
And Amazon cut out almost all of the profits from those deliveries, with
discounts over 70%... so Amazon contributed little to their income.

Wasn't able to find numbers for Fedex.. but they say no single customer
accounts for more than 3 percent of revenue[1]. And it would be safe to assume
that they negotiated just as hard with Fedex as UPS.

USPS might actually be subsidizing Amazon's packages because of how their
costs are calculated[2].

So not so bad for the other carriers.. and unless Amazon opens it up to other
companies to use, they aren't going to rival UPS or even FedEx in revenue.

0\. [https://www.thestreet.com/story/13433347/2/59-billion-
reason...](https://www.thestreet.com/story/13433347/2/59-billion-reasons-
amazon-is-not-a-threat-to-ups.html)

1\. [https://www.cnbc.com/2017/10/05/amazons-new-delivery-
program...](https://www.cnbc.com/2017/10/05/amazons-new-delivery-program-may-
not-hurt-ups-and-fedex-experts.html)

2\. [http://fortune.com/2017/07/16/amazon-postal-service-
subsidy/](http://fortune.com/2017/07/16/amazon-postal-service-subsidy/)

Edit: since the first link was written... Amazon has doubled their shipping
expenses to $16B (of course, some of that cost is setting up their own
shipping service):
[https://www.sec.gov/Archives/edgar/data/1018724/000101872417...](https://www.sec.gov/Archives/edgar/data/1018724/000101872417000011/amzn-20161231x10k.htm)
If they can get that entirely under their service, that'll be significant..
but for comparison, Fedex has $50B/yr revenue.

~~~
kennethologist
"So not so bad for either company.. and unless Amazon opens it up to other
companies to use, they aren't going to rival UPS or even FedEx in revenue."

Seems they will at some point in the future. They already allow any packages
to be delivered to their lockers [0]. So it's not too far-fetched they'll soon
allow any shipper to use their "delivery" service.

0\. [https://thehub.amazon.com/](https://thehub.amazon.com/)

~~~
astronautjones
In my anecdotal evidence, the lockers and storefront are a tire fire. Been to
my local store five times and every time there's one guy working with ten
people yelling at him like he's the devil himself and most of the terminals
not working, heaps of returns just sitting on the counter and floor out of
reach of the lone floor employee

~~~
insickness
In NYC the lockers in central locations are always full.

------
jotato
Amazon delivery has been bringing packages to us for nearly a year now. A few
things I have noticed:

1) They can never find our house. Now, We do live in a newer neighborhood (3
yrs old) but USPS, UPS, and FedEx don't have a problem. AMZL US will often
miss deliveries because they can't find our house. Usually this just sets the
delivery back a day, sometimes 2 or 3. The worst case was 3 weeks.

2) They deliver late. Not really a con; just a fact. if AMZL US is delivering
the package it won't get to us before 5.

3) Their drivers are not professionals. I get the feeling anyone can deliver
for them. I swear half of the people I see are Uber drivers who don't have a
route ATM.

4) Just yesterday AMZL US brought me a package. They guy who brought it didn't
know how to scan the package to mark it as delivered. He actually had us do it
for him. They have a long way to go before if they want to take this seriously

~~~
macspoofing
>Their drivers are not professionals. I get the feeling anyone can deliver for
them. I swear half of the people I see are Uber drivers who don't have a route
ATM.

That's exactly what they are. See more here:
[https://logistics.amazon.com/](https://logistics.amazon.com/)

~~~
mabbo
[http://logistics.amazon.com](http://logistics.amazon.com) is for small
companies to work as contractors for AMZL. AMZL doesn't actually employ any
drivers- they hire lots and lots of small companies that work on contracts
paid on a per-route basis (1 route is a days work for one driver, generally).
Those small companies can find people anywhere they like, so long as they can
do the job.

[https://flex.amazon.com/](https://flex.amazon.com/) on the other hand takes
it even further: literally everyone is an uber-style single-person contractor
doing n-hour contracts with AMZL or Prime Now to delivery packages. No middle-
man contracting company.

~~~
macspoofing
Thanks. Good info. I assumed the logistics site was for 'independent
contractors'

------
legitster
The crazy thing is Amazon keeps entering these hyper-competetive, low margin
industries. It's pretty tough to cry foul that they are acting like a trust
when they constantly position themselves as the third or fourth player
breaking up an oligopoly.

~~~
chii
Or, if you're cynical, you can say they are playing the long game. Once amazon
controls the full vertical for everything, you'd be hard pressed to find
anyone else to do business with. Then, they can turn up the money faucet.

~~~
beauzero
Books is a good indicator. We have about 100k+ listings at any given point. We
have seen at least 50% of our competitors go out of business since the last
rate hike (mid summer).

...you are now paying about $3 more per book and the majority of that now goes
to Amazon. Not the third party seller. They raised % taken and also began
taking a percentage of shipping fee which is why you see a bunch of third
party sellers listing free shipping. Basically they caught up to Ebay in that
regard.

"Used" books are not really profitable to sell on Amazon anymore. If you want
better prices go to Abebooks.com. Same sellers and generally $2-3 cheaper now.

~~~
ghaff
Though note that Amazon owns Abebooks.

------
cmsimike
I have a < 50% delivery rate to my apartment when Amazon delivers it and the
past two deliveries to work were "delivery attempted" even though they never
tried to deliver it into the office.

~~~
eqmvii
Whenever an Amazon contracted courier tries to deliver a package, they call my
cellphone because they can't get into the apartment's lobby.

It's so frustrating, and a ridiculous step backward - UPS, USPS, and FedEx are
all completely fine. But if Amazon's Algorithm decides to send it via an
Amazon contracted courier instead, I'd better be home and near my phone, or no
delivery for me!

~~~
dawnerd
Contact amazon and tell them to mark your account to not use them. I had to
because for some reason the drivers couldn't figure out the entrance to my
apartment was around the corner and an unmarked emergency exit wasn't the
entrance. Would get called early in the morning demanding me to go meet them
on the street.

The Amazon rep I talked to was able to make sure all my packages came from the
"old" services and haven't had a problem since. Guess this is what happens
when you hire people that have no experience with delivery goods and are not
paid what real delivery people are.

~~~
sbov
I like to call it the "self service" economy.

------
tmnvix
Product design, logistics, warehousing, delivery, IT infrastructure, physical
stores, ecommerce.

Plenty of companies have this kind of vertical integration too (e.g Apple) but
none that I'm aware of do this across such a large range of products - nor do
they then offer these as services to third parties (e.g. IT infrastructure,
ecommerce).

What else will Amazon decide to bring in-house? Manufacturing? Energy
production? Consumer finance?

EDIT: As an aside, I find it ironic that Amazon started out selling books. I
know plenty of people (myself included) that have daydreamed about owning a
little bookstore as a way of escaping the rat race. Success for most would
look more like Bernard Black Than Jeff Bezos.

~~~
moduspol
They do have their "AmazonBasics" program [1] where they're selling their own
"store brand" of things. I guess that's probably not their own manufacturing
(they're likely just buying in bulk and branding it) but it might be.

[1]
[https://www.amazon.com/AmazonBasics/pages/2528919011](https://www.amazon.com/AmazonBasics/pages/2528919011)

------
xedarius
I hope Amazon do something great here. Delivery firms are all awful. They only
have one job, get the package to me. So why are you delivering it at 11am when
you know I'm at work? And then again tomorrow, and again, and then leave it at
your depot where the onus is on me to collect it.

Why not deliver it at 7pm when I'm home from work? If supermarkets can manage
it (and delivery is their secondary business) - I'm sure a _delivery_ company
should be able to pull this kind of service out the bag.

For once I'm rooting for team Amazon.

~~~
iddqd
Amazon Logistics has been running for quite a while in Germany, and for me
it's looks like it's a disaster. Every order is like a lottery. If your
package gets assigned to DHL, you're almost guaranteed to get it on time. If
you get Amazon Logistics, you should be happy if it shows up at all.

~~~
johnnyfaehell
See for me it's the other way around. With DHL who knows when it'll arrive or
if the driver will even attempt to deliver your item. (Currently, I have the
problem of DHL claims something was delivered yet the front office says it
wasn't.) DHL massively overwork their drivers, which results in them having
far too many packages to deliver, therefore just end up dropping them off at a
local post office for pick up.

Amazon Logistics, it arrives constantly. Also in the UK Amazon Logistics even
deliver prime items on a Sunday - also in the UK they send a lot of items with
a few amazingly crap delivery service so when you get Amazon Logistics, DPD,
or Royal Mail, it's happy days.

~~~
dazc
For valuable items I would gladly pay extra for DPD delivery!

 __Note to amazon employees who may be watching - not really!

------
tehwebguy
Amazon delivers like 25% of the stuff we order directly in Venice.

They get the address wrong far more often then USPS, UPS and FedEx, in our
experience.

A neighbor 5 houses down has the same street number, technically on a
different street, but it faces the same way as ours so if you just eyeball it
without verifying on the map it's easy to mess up. I'm sure they will improve
but it's obvious having a consistent driver for an area is important,
especially if addresses are weird.

Also they have to scan the package and my front door is basically a cellular
dead zone, it costs them a lot of time trying to find the sweet spot to scan
on their mobile device before taking off to the next stop.

~~~
megablast
Wow, didn’t know they were big outside the US?

~~~
24gttghh
I'm pretty sure the _United States_ Postal Service doesn't deliver to Venice,
Italy. He's probably referring to Venice, California; a suburb of LA.

~~~
tehwebguy
Yep, sorry for the confusion!

------
_Codemonkeyism
We have the receiving end of this for quite some time in Berlin.

This is a huge pain compared to DHL and not working at all for me (Prime
customer since beginning).

Missed delivery dates.

Didn't find the address several times, no one else had that problem.

Software not working or drivers who had no clue about the software.

Delivery to business address up until 9pm (!)

Lost deliveries.

Had many calls with Amazon customer support, they can't blacklist me for
Amazon Logistics and they can't help in any way. Customer support told me on
several occasions they know, they get this often but can't help.

Weird thing: I saw several people who rented e.g. Enterprise vans for
delivery, how is that paying?

~~~
a254613e
I've had all those issues in Munich too. And I've managed to have amazon
blacklist them for my account.

One support rep told me that they have that option if you have more than 3
deliveries that they messed up.

I've filed a complaint after every time they didn't deliver the package
properly (as in, not delivered at all, even though it was possible), and then
I sent an email with 5 or so order numbers, descriptions of what was wrong,
and asked them to blacklist amazon logistics.

Here's the quote from an email:

>Since you mentioned that this is not the first time this has happened, please
reply to my email, giving us 3 order numbers which you feel were improperly
delivered by Amazon Logistics, together with the issues for each.

>As soon as we receive them, we will file an official complaint against this
carrier, trying to exclude them from future deliveries of your orders.

Note: Some support reps insisted that it's not possible to blacklist a single
delivery company.

------
tfinniga
In the UK, some Amazon deliveries were sent via 'Amazon Logistics', which was
usually someone in a little car full of packages. I think it's been going on
for at least the last 3 or 4 years?

~~~
bdcravens
They've had the same in the US for a while as well. What makes this different
is that they are handling both sides of the delivery, whereas before they were
delivering from their own warehouse.

------
williamscales
In Santa Clara, CA, Amazon logistics has been good for me. The drivers will
consistently call me on my cellphone if they can't find my (weirdly placed)
apartment which is more than I can say for UPS.

~~~
bogomipz
I apologize if this is a silly question but is "Amazon Logistics" just the
umbrella term for whatever local courier service they contract with?

~~~
ErrantX
I believe so.

In some parts of the UK this goes all the way down to individual contractors,
of the man-with-a-van type.

As you can imagine this leads to a mixed exxperience because they are all self
employed.

Interestingly, about 18 months ago they appeared to change tactics and begin
contracting mostly foreign drivers. Ive theorised this was a cost thing;
delivery experience went through the floor, I think they are paid a pittance
per parcel and so deliveries to my house, which can be hard to locate and
therefore takes time, winds them up.

Ive had drivers full on scream in my face over how long it has taken to find
me.

------
cjensen
Today Amazon delivered a package to me at work.

They ignored the "deliveries in rear" sign which directs them to the shipping
dock. Went to front desk instead.

They parked across a handicapped space in front. Not "in" the space, but askew
so that it also blocked the handicap loading area between the two handicapped
spaces.

I like UPS. They're professionals.

~~~
prawn
Isn't it funny that we consider the "last mile" or even last few feet the
difficult part of deliveries, something that can't possibly be automated, but
there are countless cases of presumably capable humans failing at basic but
organic tasks like reading a sign or opening a gate.

~~~
lucaspiller
I suspect this (and a lot of the issues often associated with deliveries) are
because drivers are pressured into making as many deliveries as possible, so
saving 30 seconds per delivery really adds up over a day.

~~~
simonbarker87
Yeah, it's this. all the Amazon logistics guys drive around like lunatics in
my area and my company's daily DPD collection driver says they are penalized
for bringing a package back so they absolutely have to find somewhere to leave
it.

Whats annoying is all of the big UK delivery companies offer a live tracking
feature now and a one-hour delivery window with interactive SMS systems to
manage delaying delivery etc. Amazon offers nothing, it's like going back 10
years as the parcel will arrive sometime between 8am and 8pm

~~~
Eridrus
> my company's daily DPD collection driver says they are penalized for
> bringing a package back so they absolutely have to find somewhere to leave
> it.

Much better than the situation with UPS/USPS which don't even bother to ring
the doorbell.

------
williw
Amazon Logistics have lost my packages several times. I had to call them every
time they use their own delivery service. I told them to use Google Maps, but
was told they don't have a smartphone. Luckily their customer service rep was
great, and either refunded or shipped replacements.

~~~
dawnerd
> but was told they don't have a smartphone

Every time they've delivered to me they've had their phone out with the Amazon
app with directions and a button to mark delivered so someone was lying to
you.

------
ocdtrekkie
This has to be a nightmare scenario for FedEx and UPS. From my understanding,
a decent number of their flights are pretty much paid for on Amazon deliveries
alone: The scale that Amazon ships at makes it feasible to quickly deliver
many other packages economically. If Amazon chooses to cut FedEx and UPS out
of the deal (even partially), how much will that impact those companies'
ability to operate two-day shipping affordably?

~~~
skynetv2
no kidding. about four UPS flights land in my city's airport everyday, which
happens to be one of the distribution centers / warehouse locations for Amazon
for norther CA.

------
dakotasmith
Just attempting to do this will give them a hand in negotiating with FedEx and
UPS.

------
odiroot
They are already using their own service here in Germany.

I guess in practice it's a subcontractor anyway but they only drive for Amazon
(branded cars) and are not associated with any of the big delivery companies.

------
DarronWyke
I'll echo many of the problems listed in this discussion with the Amazon
Logistics service.

Here in DFW, there's 5 main delivery vehicles for Amazon packages: USPS, UPS,
Fedex, AMZL US, and LSO (Lonestar Overnight, for some overnight/same day
delivery).

USPS is...USPS. Never really had a great interaction with them. Our local
substation is godawful. Never attempts to deliver large packages (currently in
an apartment with parcel lockers). I've found them holding onto boxes of mail
with no real warning.

UPS used be really good; the same driver would deliver to my apartment that
also delivered/took pickups from my work 3mi away. But lately that's changed
and UPS can be somewhat hit or miss, usually erring more on the side of hit.
Fedex used to be really terrible but they've stepped their game up
significantly and hit far more than miss.

Amazon Logistics? Hah. I'd say maybe a 30% hit rate if that. Many times
packages simply go past their delivery date and I have to spend time with
Amazon on the phone getting it resent with same/next day delivery with a
reputable carrier. Most of the time they just drop and run, never knock on the
door or anything (my wife is home much of the time and I have to tell her that
something's been delivered because neither she or the dog know that there's
someone at the door).

LSO is great. Never had a problem with them. They hustle their asses off and
frequently deliver early and without an issue. As are a few of the other
contracted couriers I've seen used.

------
veidr
Amazon USA recently started shipping all kinds of shit to Japan (where I
live). We use Amazon Japan a lot, but there are all kinds of products that
aren't sold here.

The shipping is pretty reasonable; a few dollars for 6-10 day delivery. I
recently bought a PS4 Pro and had it delivered 2nd day for cheaper than I
could buy that same thing here, which was pretty mind-blowing.

I've now used it dozens of times. Sometimes its UPS or one of the regular
delivery firms, but a few times its been some dude in a muscle shirt and no
uniform who just rings the bell and says, "Hello, this is Amazon".

------
mc32
I'm sure they know their own numbers... that said, how is it cheaper to have
warehousing run by your sellers (who distributed as they may be, do not have
the efficiencies/automation AMZ has) and, as it pertains couriers, I had
thought the likes of them had vertically integrated into warehousing services
for their customers? Or have they been outflanked by AMZ despite having
decades of logistics experience for very diverse industries?

~~~
UnoriginalGuy
> how is it cheaper to have warehousing run by your sellers

When you think about the people selling on Amazon's platform as "partners"
then your point is very valid. When you think about those other sellers as
"competitors" then this strategy makes a lot more sense.

A lot of third parties have complained that they joined Amazon's platform, did
well, but then had an "AmazonBasics" version of their product turn up, under-
cut them, and appear at the top of rankings squeezing the original product
out.

For example, search on Amazon for "Ladder Golf." Top ranked result and "Amazon
Choice" is an AmazonBasics set for $26.99, added in May 2016, with only 51
reviews. The second result, by GoSports, has 748 reviews, has sold since
October 2012, but for $49.99. You'll note that Amazon's product added four
years after GoSport's product has a strikingly similar design.

My point is, this is what Amazon does. It waits for sellers to do well, clones
their product, and then competes with them on price (which Amazon can due to
its sheer scale). You could legitimately argue customers benefit from lower
prices, which is undeniable, but customers also benefit from a competitive
marketplace. Once Amazon has no competition they can increase prices again.

PS - I have absolutely no association with any of the products or companies
listed above. I picked "Ladder Golf" as an example as a lot of people don't
realise AmazonBasics has expanded well beyond electronics/cables/batteries
into things like toys, household goods, garden supplies, and so on...

------
peterkshultz
Vertical integration at its finest.

I feel that this will only embolden people who claim Amazon is becoming a
monopoly (even though the numbers don't support it).

------
denisehilton
I really like the fact that Amazon it's expanding its horizon so fast. I am
really hoping for a global shipping service in the coming years.

------
acranox
I haven’t had ups or fedex deliver an amazon package to me in about two years.
But I miss it. Instead some random person pulls up in a beat up minivan and
leaves a package on my steps, and now they take a picture of them the porch
before leaving. It’s all just too weird. I preferred getting packages from
ups.

~~~
rmrfrmrf
I’ve never had an issue with Amazon’s couriers. It’s not like our UPS/FedEx
drivers go out of their way to differentiate themselves from the competition,
and as long as my stuff gets here on time and undamaged, I don’t really care
about how it’s getting delivered. Taking a photo of the delivery on the porch
doesn’t seem strange to me at all, either.

------
jmspring
Rural high sierras town for me, an hour from Reno and Truckee. Amazon delivers
just fine, FedEx too (Chewy). The bigger hiccup moving up here was for
Amazon’s logistics to realize my Bay Area locale wasn’t suitable to my new
location...things come via Reno Now. They adapted well. Chewy using FedEx has
been great too.

------
drusepth
This seems like a necessary step to automating delivery (like their drone
delivery program). I'm not sure anyone thought they were going to convince
UPS/USPS/FedEx to start using drones or other mechanical means to deliver
mail: they need their own delivery service to test from and roll out to.

------
chewyland
Now they need to get into manufacturing.

~~~
lucaspiller
They already have you covered:

[https://qz.com/1039381/amazon-owns-a-whole-collection-of-
sec...](https://qz.com/1039381/amazon-owns-a-whole-collection-of-secret-
brands/)

------
hownottowrite
If you're curious about where they're going, have a peek at the job listings
for "last mile":

[https://www.amazon.jobs/en/search?base_query=last+mile](https://www.amazon.jobs/en/search?base_query=last+mile)

------
Dowwie
No mention in this story about the Teamsters union supporting UPS drivers.
These freelance, gig-economy drivers that Amazon will replace UPS with won't
have a leg to stand on unless they organize just as the UPS drivers did.

~~~
Eridrus
FWIW FedEx also classifies their workers as contractors.

------
radicalbyte
It's interesting because the biggest Amazon competitor here in The Netherlands
- Coolblue - are doing exactly the same thing.

Funny thing is is that Amazon can't compete with the local incumbents here so
they have a tiny market share.

~~~
ddnb
i'd thought Bol would've been the biggest competitor, no?

~~~
radicalbyte
In books easily, but CoolBlue are massive in pretty much everything else.

------
soniman
This is the equivalent of Google building a cable company. It's just
negotiating leverage and spare capacity for Christmas, Amazon has no intention
of building this out.

~~~
yourfate
Here in germany amazon delivers many of it's packages with their own service,
and has for more than a year now.

------
macca321
Maybe UPS and FedEx should be building huge warehouses of stock next to their
delivery centres and opening online stores?

------
Animats
Is Amazon actually doing delivery with their own people, or are they just
rebranding and reselling something?

~~~
kevan
Mostly reselling. Amazon Logistics is larger-scale company level delivery
contracting, usually for defined service areas . Amazon Flex is the Uber for
package delivery variant.

------
nmeofthestate
NB: INSTANTLY PLAYING LOUD VIDEO

------
gt_
the best name for this service would be 'River'

------
mxuribe
(Apologies, maybe i should have posted this as its own blog post...but meh,
too late, I've posted it here...)

So...maybe it might be silly of me to ask, but why aren't FedEx and UPS
attempting to encroach into (at least some of) Amazon's territory? For
example, FedEx and UPS could make plays to compete with the AWS/IaaS offering.
Oh, i know they would trail far behind AWS for several years - including
trailing after google and microsft for that matter - but recall that amazon
built their infrastructure for their benefit, and it was only later began
selling it to others. I suppose even if FedEx, UPS don't become leaders in the
IaaS industry, at least, if they get enough big customers, that would give
them massive economies of scale that benefits their core parcel delivery
business. Also, beyond simply delivery, what else can these guys do - either
to fight Amazon, or build new business for themselves? Here are my admittedly
outlandish steps for FedEx, UPS to compete with amazon and build new
businesses...

Step 1: Change from a company that only ships packages to one that ships
packages and datagrams. Basically, build up their tech infrastructure like
what amazon did to eventually offer aws. This would enable them to reap plenty
of cost-savings over time. Then build up enough to sell to other customers for
the long-term; just like Amazon did. (Even if their platform is not as
developer-friendly as AWS, they could target legacy-type enterprises.)

Step 2: Add services where regular, paper mail is received, scanned in, and
delivered electronically to the recipient. Now, this may not be novel, as I
know there are already services like this that exist: but this would be
implemented on a massive scale...at least until most of humanity's
correspondence eventually becomes all digital. I'd like to clarify that I'm of
the very paranoid type of person, and would not like this service at all for
privacy implications...But i have to acknowledge that there are plenty of
people who have no issues with this, and/or in some cases greatly benefit from
such a service - one example i can think of: military personnel receiving
their regular mail via this service while they are abroad serving.

Step 3: I think UPS already does some of the following to some degree (not
sure about FedEx), but add warehousing and other distributor-type support
activities. Basically move up the supply chain. This positions FedEx, UPS from
"just the delivery company", to a strategic partner who "gets my company's
products over to my customers". This turns these guys from simply a delivery
company into a "logistics, data, and delivery" partner.

Step 4: Now this one is ambitious...Add wide-scale, high-production 3-d
printing of products. Now, admittedly, there are alot of constraints around
this, such as but not limited to the products being printed couldn't be so
complex. But if all we're talking about is something simple like hair combs,
etc., then why couldn't FedEX, UPS become the producers of such products, and
deliver them for me. I come up with ideas for products, submit some 3d printer
design files into some sort of FedEx or UPS receiving system, and FedEx, UPS
both produces them and delivers them. Some might ask, but couldn't i just
purchase my own 3d printer and produce my own hair comb, etc.? Yes, but I'm
talking here about massive scale of production. As a product company, if i can
save tons of money by having my products produced somewhat local to me, which
might avoid transit (especially trans-oceanic) costs, and then delivered by
the same company, i can imagine it might save plenty of money across much of
the supply (and delivery) chain. Again, it may not apply to all product
categories, but i can see a future for a company to be an ad hoc manufacturing
provider.

(Again, apologies for the length of my post here.)

