Is Amazon.com, Inc. (NASDAQ:AMZN) preparing to take on its own deliveries and go head to head with its partners, FedEx Corporation (NYSE:FDX) and United Parcel Service, Inc. (NYSE:UPS)? Bloomberg correspondent Devin Leonard thinks so. In its cover story, the publication highlighted the ambitious projects of the online retailer, and future plans could include delivery services.
FedEx and UPS deliver goods from online retailers and their best customer is Amazon. Thanks to the online retailer’s rapidly expanding businesses, it seems like Jeff Bezos is taking the company a step further by taking over its delivery functions.
With the entry of Amazon in the shipping segment, carriers didn’t just lose a major client, they gained a very powerful rival. Although a representative for Amazon denied that the company is taking over its own delivery, the rep clarified that the retailer is adding cities and drivers to its Flex package delivery service.
In an interview at the 2016 Code Conference, tech journalist Walt Mossberg asked Amazon CEO Bezos about the increasing numbers of white Amazon vans in cities across the US, pressing the executive to confirm if the company is indeed planning on replacing existing delivery services.
“We will take all the capacity that the U.S. Postal Service can give us and that UPS can give us and we still need to supplement it,” Bezos explained.
That said, Amazon reportedly leased more jets and utilizing drones to make deliveries. The company’s rep noted however, that these steps are only meant to boost delivery in the short-term. The move could turn into a separate delivery network, which may hurt traditional carriers.
In addition, the e-commerce giant is now taking over its own delivery functions in the United Kingdom, insisting that the Royal Mail no longer has the capacity to handle all its packages because of the volumes of orders. The Royal Mail denied the claim, but this did not stop Amazon from going ahead and creating its own delivery network.
In stark contrast, Amazon is depending heavily on the US Postal Service to make Sunday deliveries. The online retailer paid the service to carry more packages from a final distribution point to customers’ homes.
Amazon is expected to deliver 7 billion goods in 2016 alone. The volume of orders are overwhelming traditional carriers, especially during the peak season. Leonard explains that the online retailer does not want to depend on traditional carriers alone to handle the deliveries.
“They’re having to take more and more of these packages to themselves,” Leonard noted, adding “I don’t think Amazon.com is always the easiest customer to have. I mean they’re very demanding, and they like those low prices..They have a history with things like Amazon Web Services. When they have too much capacity or excess capacity, they say let’s bring in some customers from outside and building that into a business. That’s what people expect to happen here.”