Amazon Is Testing Its Own Delivery Service to Rival FedEx and UPS
bloomberg.com
bloomberg.com
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...
1. https://www.cnbc.com/2017/10/05/amazons-new-delivery-program...
2. 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... If they can get that entirely under their service, that'll be significant.. but for comparison, Fedex has $50B/yr 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.
It's going to be both interesting and frustrating when they open in Australia properly. They should just pay AusPost and use those lockers but I bet they'll open their own.
I think it is a given that Amazon will open up to other companies to use their delivery service. Opening up their distribution, IT, and supply chains is part of their general business plan. Eg AWS; Amazon Warehouse fulfillment; Listing your products on Amazon's site, but doing fulfillment yourself, Amazon Connect.
https://techcrunch.com/2017/05/14/why-amazon-is-eating-the-w...
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
That's exactly what they are. See more here: https://logistics.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.
I live in a condo building which requires fob access, and while the UPS and FedEx drivers have a fob (because it's the same person every day making a large number of deliveries at once at the same time every day), the Amazon drivers do not, so must stand awkwardly outside the building until somebody maybe lets them in, but is usually denied access because letting them in is a violation of our building policies and can result in a large fine. This in turn results in many packages either being left outside the building on the ground, or not delivered at all.
I think the main problem Amazon is going to have with trying to vertically integrate into deliveries is that they alone don't constitute enough volume to keep drivers employed full-time, so they would have to open the service for outside consumption like they did AWS.
It seemed much more reliable than USPS at all times.
It's been slighly annoying when they ring the doorbell to deliver at 9-10pm. The most surprising part of this has been looking out and seeing the whole family (including small children) in the vehicle.
I live at a difficult to find address (Fedex and ups often get confused) but amzl hasn't had a problem.
but they do always seem to deliver between 8pm and 9pm.
My apartment is up a flight of stairs, so they often just leave packages under the stairs or near a neighbor's door.
If Amazon wants to make this work, they'll need delivery feedback of some sort.
...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.
http://www.addall.com/New/submitNew.cgi?query=0439136369&typ...
I know I am nitpicking, but I think people are over-using the word "oligopoly" for any situation where a few companies have most of the market.
Limited competition is the lead phrase there. By this definition, parcel delivery is not an oligopoly if it’s competitive.
Really, boiled down my point is that this: "I think people are over-using the word "oligopoly" for any situation where a few companies have most of the market" is really dumb because an oligopoly is any situation where a few companies have most of the market. Perhaps the rise in use of the word oligopoly is reflective of the increase in oligopolistic markets, but it's not due to misuse, certainly not the one he outlined.
I also disagree that limited competitors is the same as limited competition. The two may often be related but don't have to be. When two competitors have razor-thin margins because they're competing aggressively, there isn't a lack of competition. When 10 competitors somehow manage to keep their prices in sync and increase their margins over time, there is a lack of competition even though the number of competitors is high.
But I really don't care to debate definitions further. I chimed in to explain the disconnect between these two views on the meaning of the word "oligopoly". I don't personally care which you prefer.
If you're going to nitpick, get your terms right at least.
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!
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.
The staff keep having to rescue packages Amazon drivers have left outside of random building entrances and even neighboring buildings instead of delivering everything to the mail room like the real carrier services have no problem accomplishing.
I've tried this several times (to drop Amazon Logistics) and reps say they can't do that.
Amazon delivery calls my cell and I can give the necessary instructions. It's the only one that works for my location.
I walked out of a work meeting because I assumed someone I know is probably dead or dying. It was because the delivery driver wanted to know how to get to my address since it didn't show up in their system...
I was livid, called support, they give you a month of prime free.
Then my next 5 packages didn't get delivered because they were all being done by "AMZL-US" which is what their shipping company shows up as. Every single one got marked as "undeliverable" at 7:30PM every day. I even resorted to calling them earlier in the day to ensure that they knew my address and could deliver it, and they always assured me it was fine, only for 7:30 to roll around and the package gets marked as undeliverable.
After my next 5 months of free prime (and 4 canceled packages, 1 I had re-routed to a storage locker and drove to get it), I had a 3 hour long call with someone at amazon that not only went through the process of "prioritising" AMZL for my address (so other carriers are more likely), they also tried to add my address to their system.
They can now finally deliver to my house, but they really like to leave things in the rain without any kind of plastic bag over the box like USPS and UPS do (they also hilariously always knock on my garage door because they can't see the front door from the road, I'm pretty sure there is some kind of "if you don't do this you are fired" rule about knocking when you leave a package, and they always look confused, knock on the garage door, then head back to their truck).
Why go through all that?
Generally I'd only try again when it was something that wasn't easily available on amazon, or where it was really cheap and I didn't need it within a day or 2.
The one thing you can be guaranteed is that if they send it by Ontrac the package is most definitely not on track to be delivered on time, if it is delivered at all.
Occasionally they have even sent me notification that a package is delivered the same day Amazon ships it out.
I let Amazon know when a package doesn't show up and they refund or replace it and deliver it with a real carrier (aka UPS).
Ontrac apparently attracts the ire of many other frustrated Amazon customers: https://www.yelp.com/biz/ontrac-anaheim
I've generally had good luck with the Amazon delivery services, except that OnTrac and Amazon seem to get here pretty late in the day. USPS gets here by early afternoon (or 10AM for my PO Box), FedEx/UPS mid-afternoon, OnTrac maybe 8-9PM.
Because the mail sorting at my local post office was generally done at random I paid for a PO Box. Consistent staff means that deliveries to my box are far more predictable and reliable. I've had maybe two misrouted deliveries with the box in 10+ years.
https://www.yelp.com/biz/golden-state-overnight-delivery-ser...
https://www.glassdoor.com/Reviews/Employee-Review-OnTrac-RVW...
Ontrac lies on their track. Had a package get reported as delivered one day, but it actually arrived the next morning. I happened to actually be leaving my apartment right as the guy was walking up. I really wanted to ask him why the tracking reported the package already delivered when it wasn't, but I had to get to work and didn't have the time.
Didn't even bother to put a note through the mail slot saying "your packages are in the bin".
Luckily my wife found them.
Really enjoying having to call Amazon and complain about a new issue every month. Their slide into mediocrity has had me trying to replace them with other services. Hard, but not impossible.
Ordered Wednesday with 2 day prime, and it now isn't coming. At no point did Amazon offer to reship the damn thing with a real courier that knows how to deliver packages.
Called in again and they promised to deprioritize Amazon Logistics. Got a 1 month prime extension and a promise that the package might come next week and if not they will re-ship it. The customer obsession Amazon principle definitely at play here!
Awesome!
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.
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.
My gripe is that every package I receive, is from abroad. Every single time, fedex (ups, dhl, ...) ask me for the exact same information (address, eori number, ...) even if I have an account with them, they don't know this information about me, even though I told them last week. I thought a logistics company might have a better handle on their processes. But none of them do!
Maybe because most people would like to get deliveries outside of normal working hours, but you can't (and shouldn't) force all delivery people to work outside normal working hours?
Though, maybe there is some sort of potential market there. Get your stuff shipped to a drop location and they will deliver it to you at your convenience.
by everyone I mean the employer (which is also the product/service provider), the employees and the customers.
if none of the employees will be willing to get $x for working at evening/night, then an increase in salary for those hours might solve the issue .
how much to increase will depend upon supply and demand.
if none of the customers want a night delivery then there's no need for that anyway, and the employer won't even bother trying to find a solution.
if only a small amount of customers want a night delivery - then the employer might setup a solution where you need to pay 1.5x of the regular price in order for it to be profitable enough for the employer and the employees.
if most customers want a night delivery - then the employer will need to make large adjustments in order to fulfill its customers' needs, or some other competitor will fill the gap.
Ever been to a restaurant or bar in the evening or on a weekend? Ever taken a bus/train/flight in the evening or on a weekend? Congratulations, you have "forced" people to provide services to you "outside normal working hours".
It's completely normal and absolutely acceptable for infrastructure to be provided at "odd" hours. Obviously, all those people must be paid extra for work outside "normal" hours. Personally, I would gladly pay more for a delivery I am more likely to actually receive.
Me too, but that's mainly because the more expensive options are worse, in my experience. For example, "free" delivery by mail into my actual mailbox vs. "premium" delivery with a parcel service forcing me to be at home an entire day on which they might come by. I would pay extra for a premium service if it were actually better.
(Agreed with your LOL at the downvoters.)
Amazon isn't likely to pay employees anything extra for working outside of "normal" hours, though.
So why do the last-mile delivery drivers get a break?
Agreed, though I usually find the "real" postal service to be significantly less awful than the various parcel services. They are more able/willing to put packages into my mailbox, and if they do mess up the delivery, the post office is usually closer than a parcel service depot out in a remote corner of a remote suburb.
In fact, one of the reasons I prefer ordering from Amazon directly as opposed to most other online shops, or third-party shops selling through Amazon, is that I know that Amazon will send my stuff using the standard postal service. (Or at least, it used to be that way.)
You mileage will vary according to your country's postal service, of course.
A person shows up and rings the bell for a solid 10 seconds. I buzz them in, then they practically throw the package from the elevator door saying "Tschussi!" as the door closes.
OK, I get it...no signature. that's fine. but you couldn't look like you were in more of a rush if you tried.
my guess is they're applying drone like KPIs to humans and it doesn't look very humane.
That sounds like a very Amazon-esque thing to do.
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.
Note to amazon employees who may be watching - not really!
Calling DHL was no help (it didn't seem like they were a customer-facing company; it was my first exposure to them and they sounded super confused that a person-not-a-business would be calling to find a delayed package), as they just told me the driver tried to deliver and they'd look into where the package was each time and get back to me (which they never did).
The one frustrating bottleneck in the process is amazon's.
'Preparing for dispatch' is an all too common message that often means your order is not going to be sent for a couple of days - if at all.
To get around it you could sometimes cancel and immediately re-order but they seem to have closed that loophole of late?
The fact that one particular DHL driver routinely unloads his parcels onto the cycle lane every morning doesn’t help my opinion of that company either.
The driver has a 200-250 stop route optimized for efficiency, they attempt delivery when near your house. At 7pm a driver has been on the clock for over 10 hours; this is unlikely to change due to air delivery commitments. Over peak season 14 hour days (DoT limit) is very common, with a 14-hour delivery window it's simply not possible to get everyone's packages to them in the evening.
If it's too high, I assume things like drone delivery will eventually replace deliverymen since they are more likely to not mind working evenings, nights, and weekends.
It's less about the guys, and more about the support infrastructure required for more delivery vehicles (even rented ones via the guys' salaries), insurance, more loading bays to get 7x more vehicles ready, more loading staff (or robots) to load 7x more vehicles, etc.
Honestly, I dread the thought of hundreds or thousands of drones buzzing around the city on a daily basis. It's already pretty bad at many touristic spots because everybody needs their own little aerial video that nobody will ever watch.
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.
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?
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.
I saw several people who rented e.g. Enterprise vans
for delivery, how is that paying?
The hire is at the driver's risk, so there's lots of ways they can lose money, some outside of their control. For example [2] reports an undercover journalist being charged for a week's van hire but only given three days' worth of work - resulting in an hourly wage well below minimum wage.
[1] https://xuberance.uber-vs.com/london [2] http://www.bbc.co.uk/news/uk-england-37708996
They started out terribly, but Amazon seems to have got their head round it nowadays.
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.
My understanding was that Amazon has been working towards their own courier service for a while.
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.
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
Much better than the situation with UPS/USPS which don't even bother to ring the doorbell.
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.
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.
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.
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".
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...
I feel that this will only embolden people who claim Amazon is becoming a monopoly (even though the numbers don't support it).
https://qz.com/1039381/amazon-owns-a-whole-collection-of-sec...
Funny thing is is that Amazon can't compete with the local incumbents here so they have a tiny market share.
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.)