How Amazon Will Become a UPS or FedEx

Kevork Djansezian  Getty Images

Kevork Djansezian Getty Images

Late previous year, Amazon jumped into the "Uber for Trucking" space with the debut of Relay, an app created to make it easier to pick up and drop off at Amazon warehouses by allowing drivers to check-in with QR codes at security gates rather than flashing a badge and paperwork. It's expected to roll out in Los Angeles in the coming weeks, the Wall Street Journal has reported.

The video emphasizes FedEx has "a 40-year head start" on building a shipping network tailor-made for e-commerce, an $1.7 trillion industry that's growing significantly faster than brick-and-mortar retail.

To the undoubted relief of both major shippers, Amazon's plan is limited to start with. If the online retail giant manages to get market share in this industry, it would boost revenues massively for Amazon.

Amazon was a hot topic during FedEx's quarterly earnings call in December. Amazon hopes that in the future, this will grow into a full fledged business that will compete with other large shipping companies.

"Obviously, we don't address hypotheticals", FedEx Chairman and CEO Frederick W. Smith said before referring the question to Raj Subramaniam, executive vice present and chief marketing and communications officer. This is just one of many live Amazon seller training videos recently released by Amazon thinks that they will be able to provide a cheaper alternative for business customers with a more desirable pricing structure, but details have yet to emerge.

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In recent years, Amazon has established its transport and supply network, and has recently expanded its operations overseas. The WSJ reports that "FedEx has roughly 650 aircraft, 150,000 trucks, 400,000 employees and 4,800 operating facilities globally to handle about 12 million shipments a day". However, they often fail to come close to meeting the time frames that you see with orders fulfilled through Amazon itself, she told the E-Commerce Times.

Research and advisory firm Forrester forecasts that 17 percent of all US retail sales will be made online by 2022, up about 5 percent from the almost 13 percent share e-commerce held of retail past year.

The Washington Post doesn't feel that Amazon is going to be that much of a threat to the existing delivery services business, despite the panic reaction in the market. Response was, at best, muted: UPS noted that it continues to support Amazon among its many clients, and Fed Ex largely clammed up.

"But for the vast majority of products moved, it's nearly certain that they're going to be moved, they're going to be delivered by one of those three networks and some of the smaller regional players, as far as the eye can see", Smith added.

Publicly, UPS and FedEx have not seemed particularly concerned about the impact of Amazon's moves.

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