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Amazon continues their march towards retail domination. Today’s industry that Amazon plans to dominate… *spins wheel*… is shipping! On Friday, a Wall Street Journal report claimed that Amazon’s next big move is to start their own shipping company. This comes after Amazon dove head first into the grocery market by purchasing Whole Foods and even starting offering free grocery delivery to their Prime members. Two weeks ago, Amazon got into the health care industry in an ambitious joint venture with Berkshire Hathaway and JPMorgan Chase.
The new service is called “Shipping with Amazon” and is expected to launch in Los Angeles in the coming weeks. The new courier service from the e-commerce behemoth would pick up packages from businesses and deliver them to customers. Amazon’s shipping service would encourage third-party merchants to sell goods on Amazon because they could offer cheaper shipping than UPS or FedEx. The service could expand to more cities once all of the kinks are worked out.
There are 21.7 billion reasons why Amazon would want their own delivery system. Why should Amazon pay a middleman when they can actually create their own shipping company for barebone delivery costs as well as make some money off other deliveries. The move really makes sense when you see how much money Amazon is spending on shipping. In Amazon’s latest regulatory filing that was posted earlier this month, it showed enormous shipping expenditures by the retail giant. “Shipping costs, which include sortation and delivery center and transportation costs, were $11.5 billion, $16.2 billion, and $21.7 billion in 2015, 2016, and 2017,” the filing said. “We expect our cost of shipping to continue to increase to the extent our customers accept and use our shipping offers at an increasing rate, we reduce shipping rates, we use more expensive shipping methods, and we offer additional services.”
Currently, UPS is still a partner of Amazon, but they may soon be competitors. If Amazon was to provide their own nationwide shipping that would devastate traditional couriers such as UPS, FedEx, and the US Postal Service. If Amazon carries out this delivery process correctly they could cut down on the number of fulfillment centers, plus make product deliveries quicker and cheaper. We are quickly heading to a world where Amazon is our overlords for everything.