Is Amazon finally launching its logistics service?
- This week TJI Research reported select shippers in Chicago, Los Angeles and New York have been invited to use a service called Amazon Shipping. The shippers can reportedly print Amazon shipping labels and Amazon carriers pick up the packages from shippers' warehouses.
- The report suggests Amazon Shipping is currently only a ground operation and is only fulfilling Amazon Prime orders in the case that delivery distances make two-day shipping possible via ground.
- Amazon offered no comment to sister publication Supply Chain Dive, but also did not deny the report.
Amazon executives have repeatedly insisted that the company's growing ground and air fleets are meant to dial up capacity when needed and not to edge out existing third-party logistics. However, Amazon's 10-K filing with the Securities and Exchange Commission earlier this year listed "companies that provide fulfillment and logistics services for themselves or for third parties, whether online or offline" as a description of the company's competition.
And this is not the first sign that Amazon Shipping is on the way. CNBC got word that early pilots of the service had begun in Los Angeles in November (at steeply discounted rates) and The Wall Street Journal published a similar report in February (calling the program "Shipping with Amazon").
Though Amazon will not confirm it, Amazon shipping labels and pickups are logical next steps for the company that seems intent on keeping this part of the business a mystery.
Jeff Bezos in his letter to shareholders released last week said the Prime Membership and Fulfillment by Amazon are "of great importance" in setting the platform apart from competitors like eBay in the eyes of sellers. If the Amazon Shipping service can make that offer even more attractive to sellers the company would have no reason, beyond regulatory interference, not to grow it.
That said, other third-party logistics companies like FedEx have been gearing up to offer what a nascent logistics service, even from Amazon, may struggle to provide in the form of 6-day weeks and after hours pickups. FedEx has also been publicly insisting that Amazon is not a threat despite Wall Street analysts' statements to the contrary.
"Amazon will be experimenting at the right scale for a company of our size if we occasionally have multibillion-dollar failures," Bezos wrote. Amazon Shipping may very well be an experiment, but it seems unlikely at this point that an effort so close to the company's core offering could end up in that category.
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