Will Amazon Fire UPS Over Christmas Catastrophe?

[lawnphysics]

Absolutely not.

Still tired. I meant....That I had just re-read it, and realized how repetitive I was. Please don't read it again. You might actually believe what I posted haha. Repetition is the answer, at least that is what they told me in school. I blame it on my college education. Always someone to blame right? lol

 

[ChickenLegs]

Your avatar is epic

 

[SignificantOwner]

An interesting article in WIRED from Monday titled "Christmas Delivery Fiasco Shows Why Amazon Wants Its Own UPS"

Some highlights:

"Jeff Bezos’s wild plan to deliver packages using drones has been way overhyped. But grocery delivery service Amazon Fresh is very real. Amazon isn’t depending on UPS or any other delivery service to get heads of lettuce and bundles of carrots to your door. It’s using its own trucks, driven by its own employees (or contractors).

In the long term, it’s not hard to see the company combining its Locker program — which offers customers the option of having packages delivered to 7-Eleven stores and other public drop boxes — with its own shipping and logistics, eventually creating its very own alternative to UPS and FedEx.

Walmart already is headed that way with Walmart To Go, a same-day delivery service that leverages the company’s national logistics chain (but still relies on UPS for home delivery), and with its own grocery delivery service."

I'm not saying it will be easy or quick for them to do this but all signs point to Amazon having their own delivery vehicles at the expense of UPS and Fedex business. They don't have to deliver everywhere in the US - they can simply offer Amazon branded delivery in metro areas where density is the greatest and where the profit margin is greatest. In essence, they skim the cream and give the rest (suburban and rural) to Fedex, UPS and USPS. Sound familiar? It should, that is the exact strategy UPS and Fedex employ with SurePost and SmartPost.

http://www.wired.com/business/2013/12/amazon_ups/

Another good article on the subject can be found here:
http://www.dailyfinance.com/2013/12/31/amazons-gift-giving-and-future-delivery-potential/

"This is exactly why Amazon will eventually have its own delivery service. Sure, Amazon is helping out the United States Postal Service at the moment, but Amazon is not the kind of company that likes to rely on third parties. To understand companies like Amazon, Wal-Mart Stores , and Google, you must understand that their true long-term goals are to steamroll all competition and industry counterparts and to take over the world from a consumer standpoint.

Many people will say that Amazon isn't capable of building its own delivery system, but remember when every pundit on Wall Street thought Amazon would go bankrupt in the early 2000s? How about when many people felt as though AmazonFresh (food delivery service now available in select cities and growing) would never get off the ground?

The point here is that while it's OK to not bet with Jeff Bezos, you should never bet against him. If he sees an opportunity where he can keep more of his operation in-house, he will take advantage of it. And it will be as efficient as possible."

Looks like Amazon threw down the gauntlet.

 

[brett636]

I saw that article too, and those of us who have several Amazon facilities nearby could be hit pretty hard by this depending on how it pans out. I guess its safe to say that this high level of growth we have seen come from Amazon wasn't meant to last forever. Building their own delivery network will probably be a bit more difficult than they think, but Amazon is not a company that tends to fail at their endeavors so we will just have to wait and see how this ends up working out.

 

[SignificantOwner]

I saw that article too, and those of us who have several Amazon facilities nearby could be hit pretty hard by this depending on how it pans out. I guess its safe to say that this high level of growth we have seen come from Amazon wasn't meant to last forever. Building their own delivery network will probably be a bit more difficult than they think, but Amazon is not a company that tends to fail at their endeavors so we will just have to wait and see how this ends up working out.

They have a few things going for them. First, they're not afraid to lose money hand over fist in the short term while building out a long term infrastructure. Second, they've been experimenting with regional carriers for years so they've already gained significant transportation knowledge and have probably designed their model network and experts to roll it out. Third, they don't have to take the entire country live at once. They have the time and technology to implement their plan piece by piece. This will help them avoid a DHL scenario.

Our upper management has been eliminating regions and districts and raising their own compensation for years. They own this. Time for them to lead, and to give the rest of us a reason to follow their leadership.

 

[TUT]

Looks like Amazon threw down the gauntlet.

If the bean counters at UPS and Fedex see this as a long term threat they should immediately raise prices on Amazon and Walmart. And when they ask why? You have become a threat to us and we will no longer ship your packages at a loss. We've helped you immensely getting the one-up on your competition and this is what you do. Or maybe not, but if one is being shrewd perhaps all should be.

 

[bbsam]

If the bean counters at UPS and Fedex see this as a long term threat they should immediately raise prices on Amazon and Walmart. And when they ask why? You have become a threat to us and we will no longer ship your packages at a loss. We've helped you immensely getting the one-up on your competition and this is what you do. Or maybe not, but if one is being shrewd perhaps all should be.

I think that will be coming soon.

 

[UpstateNYUPSer(Ret)]

I think that will be coming soon.

Would that be considered a FU surcharge?

 

[TUT]

I think that will be coming soon.

Really what Amazon should be doing is what everyone else does. Pass their shipping costs over to buyers and not take a 2-3 billion dollar loss in shipping each year. They are the one's doing the unnatural things here. People only expect it because you spoiled them with it. Everyone understood there would be a real shipping cost and not free shipping after $80. How consumers work, if I'm paying $80 for it and everything is free after, you bet your ass I'm going to lean hard on it and use it as much as possible.

 

[bbsam]

Would that be considered a FU surcharge?

I don't think so. Just business. If WalMart were to start shipping half with UPS they wouldn't get the same Fedex discount they're getting now.

 

[worldwide]

If the bean counters at UPS and Fedex see this as a long term threat they should immediately raise prices on Amazon and Walmart. And when they ask why? You have become a threat to us and we will no longer ship your packages at a loss. We've helped you immensely getting the one-up on your competition and this is what you do. Or maybe not, but if one is being shrewd perhaps all should be.

I'm more concerned about the number of jobs (in all areas) that would be affected if/when Amazon starts diverting volume.

 

[Rainman]

Really what Amazon should be doing is what everyone else does. Pass their shipping costs over to buyers and not take a 2-3 billion dollar loss in shipping each year. They are the one's doing the unnatural things here. People only expect it because you spoiled them with it. Everyone understood there would be a real shipping cost and not free shipping after $80. How consumers work, if I'm paying $80 for it and everything is free after, you bet your ass I'm going to lean hard on it and use it as much as possible.

But of they can take a loss now and eliminate competition it might be a smart move for them. The Japanese automakers did this years ago, selling at little or no profit, possibly even a loss. But it earned them the toehold in the market, which with quality products, got them the market share they enjoy today.


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[TUT]

But of they can take a loss now and eliminate competition it might be a smart move for them. The Japanese automakers did this years ago, selling at little or no profit, possibly even a loss. But it earned them the toehold in the market, which with quality products, got them the market share they enjoy today.


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Without a doubt that is their plan. But when they start biting the hands of partners that allow them to attempt this?

 

[Returntosender]

 

[Rainman]

Without a doubt that is their plan. But when they start biting the hands of partners that allow them to attempt this?

I'm not sure what UPS or Fed Ex can do to stop it. Neither one will raise the rates like others have suggested in some of the other posts. They will probably ride it out and see what happens. It will be just one more leverage point they will use against us. They would probably be happier as a smaller company anyhow.


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[SignificantOwner]

Formerly known as Webvan, which didn't work out so well. I still don't think the public trusts the seller to pick their produce.

 

[Brownslave688]

I'm not sure what UPS or Fed Ex can do to stop it. Neither one will raise the rates like others have suggested in some of the other posts. They will probably ride it out and see what happens. It will be just one more leverage point they will use against us. They would probably be happier as a smaller company anyhow.


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Why wouldn't they raise rates? Really it's very shirt sighted if ups doesn't cut the discount.

Say 30 years we had been able to raise rates on fed ex? It would of put them out of business before they could become the competition. If amazon is truly looking to deliver their own stuff ups is enabling them to do so by cutting their rates so drastically.

With full rates that 2-3 billion loss becomes much much more. Their profit margin goes from a few pennies a share to big time in the red. A few quarters of this and the investors start dropping like flies. Investment money is the only thing propping up amazon. It's sure all hell not profit

 

[Rainman]

Why wouldn't they raise rates? Really it's very shirt sighted if ups doesn't cut the discount.

Say 30 years we had been able to raise rates on fed ex? It would of put them out of business before they could become the competition. If amazon is truly looking to deliver their own stuff ups is enabling them to do so by cutting their rates so drastically.

With full rates that 2-3 billion loss becomes much much more. Their profit margin goes from a few pennies a share to big time in the red. A few quarters of this and the investors start dropping like flies. Investment money is the only thing propping up amazon. It's sure all hell not profit

I honestly don't think they have the guts to do it, but I do agree with your logic.


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[scratch]

Lazar Ship delivered an Amazon box to my house today, it was the first one I have seen. Usually most of my Amazon stuff will come out of Kentucky and it takes two days. I ordered the item Sunday night, and it was shipped out of Louisville. Lousy delivery, package was left out in the weather and on my bottom front step. My wife didn't hear the doorbell ring and she almost tripped over it. I can't wait until I get the Amazon feedback e-mail. Lazar Ship will probably get better with their transit times, they stink right now.

 

[TooTechie]

I ordered work shoes last summer on amazon with free shipping...came Lasership and took 9 DAYS. I ordered more work shoes on amazon a couple weeks ago and paid extra to "get it by this date" well it came Lasership again and was 2 days later than they promised so I called and got the shipping charge refunded. Lasership sucks.