Amazon Restarts Shipping Unit That Competes With UPS and FedEx
Amazon Shipping, paused earlier in the pandemic, handles packages from other websites and selling channels
By Sebastian Herrera
Wall Street Journal
Updated Aug. 18, 2023 3:58 pm ET
Amazon Shipping—a competitor to UPS and FedEx until it was paused earlier in the pandemic—is back now in the contiguous U.S. PHOTO: MICHAEL M. SANTIAGO/GETTY IMAGES
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Amazon.com has restarted a shipping service for external deliveries, bringing back a program that it paused earlier in the Covid-19 pandemic and that competes directly with FedEx and United Parcel Service.
Amazon Shipping is now available in the contiguous U.S., the company confirmed Friday. The service handles packages sold on Amazon’s website as well as items from other websites and selling channels. To be eligible for the program, businesses must also sell on Amazon’s website, a spokeswoman said.
The online shopping giant vastly expanded its logistics footprint to meet a pandemic demand surge but last year found itself with excess capacity in its network. The company sublet millions of square feet of warehouse space and began to overhaul its delivery systems.
As the company has recovered, it has looked to push the limits of speed and placed packages closer to customers. Amazon established more same-day delivery centers, which are ferrying orders to shoppers in a day or less.
The company is also trying to reinvent its packaging, The Wall Street Journal reported this month. Amazon has looked to the elimination of extra packaging as its next delivery frontier to maintain its dominance, please package-conscious customers and meet climate-related goals.
Amazon once relied heavily on UPS and FedEx for its delivery services but weaned itself from them in recent years as it built out its own shipping network that includes hundreds of warehouses and more vans, planes and long-haul trucks.
In 2018, the company started the Amazon Shipping service and a year later ended a shipping contract with FedEx, which increasingly viewed the online merchant as a competitive threat because of its growing logistics network. Amazon accounted for about 11% of UPS’s revenues in 2022, according to the company.
Executives paused Amazon Shipping earlier in the pandemic because the company was flooded with orders in the wake of lockdowns. A website for the business now invites sellers to participate, saying it is “open for your business.”
“We’re always working to develop new, innovative ways to support Amazon’s selling partners, and Amazon Shipping is another option for shipping packages to customers quickly and cost-effectively,” Amazon spokeswoman Olivia Connors said. “We’re now making it available to more selling partners.”
Shipping website Freight Waves and Insider earlier reported the expansion of Amazon Shipping.
Logistics has continued to be a focus for Amazon, and one that Chief Executive Andy Jassy has maintained as a priority because it is the engine that runs Amazon’s retail business and a primary touchpoint with customers. More recently, Amazon has looked to push the limits of speed. It overhauled its logistics division to place packages closer to customers and has established more same-day delivery centers, which ferry orders to shoppers in a day or less.
The company this month reported robust earnings that showed improving health in areas from online retail to digital advertising after a stretch of slowing growth and mass layoffs.
Although Amazon isn’t growing at the rate it once was, the company appears to have rebounded from a recent drought and is seeing resilience in its e-commerce business. Its revenue for the second quarter rose by nearly 11% to $134.2 billion, which beat analyst expectations, and the company projected a similar pace of expansion in the current quarter.
Although growth has slowed at Amazon, the company is seeing resilience in its e-commerce business. PHOTO: BRENDAN MCDERMID/REUTERS
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Paul Ziobro contributed to this article.
Write to Sebastian Herrera at sebastian.herrera@wsj.com
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Appeared in the August 19, 2023, print edition as 'Amazon Restarts Unit That Competes With UPS, FedEx'.
Amazon Restarts Shipping Unit That Competes With UPS and FedEx - WSJ |
