The Wall Street Journal posted a report today claiming that Amazon plans to take on UPS and FedEx with a new service called Shipping with Amazon or SWA. It bases the story on “…according to people familiar with the matter.”
The WSJ article states the company is in the final stages to offer this service to third-party marketplace sellers already operating on the platform. But the report claims the vision is to expand the service beyond those businesses not operating on the platform.
Further, the WSJ says the company plans to undercut the pricing by FedEx and UPS, but it still unclear on the exact pricing structure.
Apparently, if the service goes public, it may be based on a pilot project in the Los Angeles area that the WSJ reported on last year.
Game Changer for Merchants?
To date, Amazon has been promoting the virtues of Amazon FBA to sellers and businesses. By spreading products in a geographically advantageous method to offer 2-day delivery to most of the U.S., SMEs could take advantage of the eCommerce giant’s logistics and delivery network.
Currently, Amazon operates over 35 local delivery networks in select cities in addition to using USPS, UPS, and FedEx as their delivery carriers.
Expanding to become a full-size logistics company that can pick up from businesses and deliver the orders to a customer may bring more SMEs to Amazon.
While Amazon FBA has a lot of advantages for merchants, there are also some businesses that sell specialized products or limited edition products that would not be a good fit for FBA.
With Amazon Prime Members spending almost twice that over regular members, and most Prime members probably looking for that Prime tag on products to ensure speedy delivery, an Amazon controlled logistics network may allow further inclusion of Prime-eligible products.
This is all very much speculation as to the real intentions for this service. But it is easy to see how Amazon could benefit from more businesses by third-party sellers if they can pick up the package and manage the delivery themselves.
Per the WSJ article, the service is supposedly slated to start within weeks in the Los Angeles area and will expand to other cities later in the year.
If SWA is announced, we look forward to hearing how this may fit into a nationwide strategy. Especially with the recent news from Amazon building out an air hub at Cincinnati/Northern Kentucky International Airport (CVG).
We’d love your thoughts about the possibility of Amazon offering a competitive service to UPS and FedEx. Head over to our Facebook Discussion Group or use the comments section below.