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One industry insider called Amazon’s shipping promises a “publicity stunt.”
Amazon built its massive business by offering door-to-door delivery of millions of items, and the company is apparently trying to figure out ways to bring more of that process in-house by cutting out third-party delivery companies.
The Wall Street Journal reports that Amazon is offering to forgo extra fees like holiday and weekend upcharges when merchants use its expanding home delivery service, Amazon Shipping, rather than traditional carriers like FedEx or UPS, and promises to deliver products from supplier to consumer in seven days.
Residential surcharge fees at FedEx average about $3.80 per parcel and are about $3.95 at UPS, per WSJ, which learned of Amazon’s plans when it reviewed an email sent to shippers in the New York area. The two other carriers also add fluctuating fuel surcharges.
Extra fees can amount to more than 30 percent of shipping costs, per WSJ.
The costs of residential delivery are factored into Amazon’s merchandise prices, eliminating the need for upcharges.
FedEx and UPS declined to comment on Amazon’s new strategy but have said in the past it would take years for Amazon to compete with their established delivery networks. Stocks at both companies were down Wednesday after the story was released, per Seeking Alpha.
Gordon Glazer, a senior consultant for San Diego-based parcel consultancy Shipware LLC, said he’s waiting to see the “guts” of how Amazon’s delivery program would operate.
“I believe this is this another Amazon publicity stunt like the idea of drones replacing uniformed drivers. This will keep the rest of industry scrambling to deal with the Amazon effect,” he told Logistics Management. “More likely, it will be a selected program for hand-picked vendors to further enhance their Shipper Fulfilled Prime offerings.”
“Even limiting services to residential deliveries, it will take years and billions of dollars to build out a national distribution network for non-Amazon packages,” he said.
But Amazon is also moving ahead with testing drone delivery systems, deploying a six-wheeled sidewalk robot called Amazon Scout in a Snohomish County, Washington neighborhood near the company’s Seattle headquarters, ars Technica reported. The robots are the size of a small cooler and “roll along sidewalks at a walking pace,” Amazon said.
And company researchers are working on an air traffic management system to support safe low-altitude drone operation of drones, working with NASA and Single European Sky ATM Research (SESAR) to test the system, per Chain Store Age.
“We will always prioritize safety first within our system,” said Bob Roth, director, Amazon Prime Air. “People both on the ground and in the air are the most important to protect. We’re building a traffic management system with this as our guiding principle.”