Some stories just won’t lie down. They keep getting up and recirculating, again and again… and again. Like a bad smell. Last week was one of those weeks when the scent of something old and familiar could once more be detected.
As highlighted in the excellent Milkman newsletter (and I’m not just saying that because they let me write for them) it has been reported – once again – that Amazon is – once again – building a delivery service.
This is according to the Wall Street Journal, which used this headline in its story: “Amazon to launch delivery service that would vie with UPS, FedEx” on 9 February. The new service will be called Shipping With Amazon (SWA) and will give the one-time bookseller even greater control over, and access to, everything ordered from its websites.
SWA is not a revolutionary idea. There’s probably someone in the Walmart/Asda empire saying “we started doing this years ago with toYou” – a retailer with its own fulfilment network sells empty space in its trucks and warehouses to retailers who rely on someone else to deliver their orders. And in so doing, costs are shared between the two parties.
There are others doing similar things with their spare capacity, too. It’s a bit like the gig economy for empty space. One minute you’re quite literally nothing, the next you are the space occupied by a paid-for parcel.
So why all the noise about Amazon taking on the likes of FedEx and UPS? And how realistic is such speculation? Could it simply be the case that whenever Amazon makes any kind of move the media gets itself over-excited and hypes things out of proportion?
Well, yes. But also, no.
As I’ve said – and written – frequently, there is a tendency among some in the press to blow things out of proportion where Amazon is concerned. The idea that the launch of SWA means it will be going head-to-head with FedEx and UPS is perhaps a little far-fetched.
First, some perspective. SWA will go live in Los Angeles first, and although the Wall Street Journal quotes an unnamed source as saying there are plans for expansion (“well, duh…” as they say in Southern California) it hasn’t gone live yet. No date is given for when that’s likely to happen; we’re just told Amazon is preparing SWA.
Maybe that’s why, in the wake of the Wall Street Journal story, shares in FedEx and UPS dipped by just 2%.
It was the same a couple of years ago when someone wrote a story about Amazon leasing cargo planes. Apparently that signalled the end for FedEx and UPS too. Leasing 20 planes was all it took for predictions of the death of traditional air freight businesses. This is a little crazy when you consider FedEx has a fleet of around 400 planes, and UPS has around 250 of them.
Amazon is not going to compete directly with FedEx or UPS or any other carrier; it is not coming to eat your lunch. Instead, it is going to do what it always does. Which is to trial and test new ways of doing things, add new services, learn more about customer behaviour and expectations, and learn how to flex its systems effectively during peak periods.
It’s going to do it gradually – hello, LA. And it’s going to let other people have some short-term benefits as long as they help cover the costs of these trials – hello, renting out under-utilised space.
Trying to take on, and beat, carriers at their own game is an expensive activity. It’s the sort of thing that requires a huge investment in people, infrastructure, and time. All of which are within Amazon’s power, of course. But why on earth would it allow itself to become mired in a battle like that?