Amazon now has 43% of all ecommerce sales... Shipped: 30% UPS, 30% FedEx, and 40% USPS.
This article says Amazon accounts for $1B of UPS 60B revenue -- only 1.67%[0]. And Amazon cut out almost all of the profits from those deliveries, with discounts over 70%... so Amazon contributed little to their income.
Wasn't able to find numbers for Fedex.. but they say no single customer accounts for more than 3 percent of revenue[1]. And it would be safe to assume that they negotiated just as hard with Fedex as UPS.
USPS might actually be subsidizing Amazon's packages because of how their costs are calculated[2].
So not so bad for the other carriers.. and unless Amazon opens it up to other companies to use, they aren't going to rival UPS or even FedEx in revenue.
Edit: since the first link was written... Amazon has doubled their shipping expenses to $16B (of course, some of that cost is setting up their own shipping service):
https://www.sec.gov/Archives/edgar/data/1018724/000101872417...
If they can get that entirely under their service, that'll be significant.. but for comparison, Fedex has $50B/yr revenue.
>> So not so bad for the other carriers.. and unless Amazon opens it up to other companies to use, they aren't going to rival UPS or even FedEx in revenue.
I think it is a given that Amazon will open up to other companies to use their delivery service. Opening up their distribution, IT, and supply chains is part of their general business plan. Eg AWS; Amazon Warehouse fulfillment; Listing your products on Amazon's site, but doing fulfillment yourself, Amazon Connect.
What you're failing to consider is that this 1.67% of revenue is more like 10-15% of their volume, and that in small package scale is everything. That extra volume lets the carrier load more full trucks direct to smaller destinations, which decreases handling costs (unload, sort, reload). This is why small package carriers give such large discounts to big accounts. The top line decrease would be small, yes, but losing the volume would INCREASE operational costs.
"So not so bad for either company.. and unless Amazon opens it up to other companies to use, they aren't going to rival UPS or even FedEx in revenue."
Seems they will at some point in the future. They already allow any packages to be delivered to their lockers [0]. So it's not too far-fetched they'll soon allow any shipper to use their "delivery" service.
In my anecdotal evidence, the lockers and storefront are a tire fire. Been to my local store five times and every time there's one guy working with ten people yelling at him like he's the devil himself and most of the terminals not working, heaps of returns just sitting on the counter and floor out of reach of the lone floor employee
If you are "self fulfilled Prime" i.e. your own warehouse...you must use Amazon negotiated rates and print Amazon labels. We do this. I would expect them to open their shipping service to us for this. It will put mail consolidators like Newgistics out of business. Newgistics picks up from us, sorts, then delivers to the nearest end point (Bulk Mail Processing Center), where USPS takes possession of the mail and delivers it "last mile".
If you need shipping software that allows you to rate shop Amazon (to do self fulfilled Prime)...I would suggest www.desktopshipper.com. They used to be named IBS Northwest but are getting away from that name for obvious reasons.
I hope they manage it better than they manage the "ParcelPoint" locations in Australia - at least two of three in the CBD near me have closed down but were still listed on the site. Cue parcels going missing - Amazon just refunded me. Their own tracking didn't specify what happened.
It's going to be both interesting and frustrating when they open in Australia properly. They should just pay AusPost and use those lockers but I bet they'll open their own.
I imagine ideally Amazon.com would prefer merchants use "fulfilled by Amazon" and leave the logistics of shipping from Amazon to the customer up to Amazon.
I think it will start with special items, like printed business cards. They're custom made so you can't leave a stock with Amazon to fulfil, but they still want to capture that market and offer Prime delivery. So it makes sense to let a third party manufacturer-seller ship through Amazon Logistics.
The hub service seems to be for buildings, adding their locker technologies. I don't think there's a way for people to send non-amazon packages to an amazon locker.
This article says Amazon accounts for $1B of UPS 60B revenue -- only 1.67%[0]. And Amazon cut out almost all of the profits from those deliveries, with discounts over 70%... so Amazon contributed little to their income.
Wasn't able to find numbers for Fedex.. but they say no single customer accounts for more than 3 percent of revenue[1]. And it would be safe to assume that they negotiated just as hard with Fedex as UPS.
USPS might actually be subsidizing Amazon's packages because of how their costs are calculated[2].
So not so bad for the other carriers.. and unless Amazon opens it up to other companies to use, they aren't going to rival UPS or even FedEx in revenue.
0. https://www.thestreet.com/story/13433347/2/59-billion-reason...
1. https://www.cnbc.com/2017/10/05/amazons-new-delivery-program...
2. http://fortune.com/2017/07/16/amazon-postal-service-subsidy/
Edit: since the first link was written... Amazon has doubled their shipping expenses to $16B (of course, some of that cost is setting up their own shipping service): https://www.sec.gov/Archives/edgar/data/1018724/000101872417... If they can get that entirely under their service, that'll be significant.. but for comparison, Fedex has $50B/yr revenue.