Alexa, what industry won’t Amazon disrupt?
On Friday, The Wall Street Journal reported that Amazon is unveiling a new delivery service called “Shipping with Amazon.” The service will launch first in Los Angeles and then roll out to other cities. The news comes on the heels of mind-blowing news that Amazon will partner with JP Morgan Chase and Berkshire Hathaway to disrupt the healthcare industry with their own health care company.
As a direct competitor to FedEx and UPS, Shipping with Amazon will first deliver products from third-party sellers on Amazon’s site and then shift towards shipping items from outside of the Amazon ecosystem. While it’s an expensive undertaking, industry experts believe it illustrates the importance of delivery.
“Amazon’s entry into delivery services is yet another proof point that major global ecommerce players are focused on last mile delivery as an opportunity for growth and profitability,” said Pierre Winand, president and CEO at Radial.
This isn’t completely new; Walmart closed 63 Sam’s Club stores earlier this year to convert 12 of them into fulfillment centers. Amazon itself has built massive distribution centers, is involved with ocean freight and has a program called Amazon Key, where drivers can leave packages inside of people’s homes.
On the consumer side, Winand believes this could be a win for retailers and consumers.
“While this move by Amazon into the already crowded U.S. logistics space could spur price wars among major logistics provides, this could also benefit retailers and customers alike as long as it does not affect quality and reliability,” Winand said.
Bob Hetu, a Gartner analyst cited how costly the endeavor might be but doesn’t think it’s that much of an obstacle.
“The markets continue to allow Amazon to destroy any profitable business model they can find,” said Hetu.
FedEx is taking the news in stride. (Adweek also has reached out to UPS and Amazon.)
“The headline in today’s Wall Street Journal demonstrates a lack of basic understanding of the full scale of the global transportation industry,” noted Patrick Fitzgerald, svp integrated marketing and communications at FedEx.
And in a shot across the bow, Fitzgerald said: “A much clearer explanation of what it takes to truly provide outstanding service to ecommerce and all customers is featured in a video available” on the FedEx’s site.