Amazon is aiming to take UPS and FedEx by storm, with the eCommerce giant reportedly delivering packages in Los Angeles.
According to a recent report by The Wall Street Journal, Amazon sees the logistics supply chain as an area that is rife for change and bets it can save $1.1 billion annually if it disrupts it by delivering merchandise with its own workers and own trucks.
A subsequent report by Forbes reported that Tim Collins, a veteran of Amazon who left to join Uber, is back as vice president of global logistics. Right now, Amazon is focused on ensuring packages are delivered quicker and more efficiently, betting shorter drives and more packages per delivery route will be a more profitable way to deliver goods. It’s become an expectation from Amazon Prime customers who pay $99 annually for the safe and quick delivery of its packages. But Amazon isn’t only delivering its own packages; Forbes reported it has begun delivering its customers’ packages as well.
While Amazon is looking to expand into delivering packages, it is also preparing for the holiday selling season by ramping up its staff. In August, the company’s CFO, Brian Olsavsky, said Amazon is in the process of adding 18 warehouse facilities during the quarter in preparation for the holiday crush. That triples up the warehouses slotted for the same quarter last year — when Amazon built only six. “It’s a combination of what we saw in Q4 of last year and what we’re seeing year to date in unit growth,” he said on a call. The additional warehousing is just one part of the plan. It has also raised the fees charged to merchants using its logistics networks during the holiday rush but has lowered fees for the pre-holiday period in an attempt to motivate merchants to get their stock out the door in advance of the holiday rush. Amazon has also loosened its rules such that merchants can ship goods from their own warehouses and still qualify for the Amazon Prime program.