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How Amazon Is Reducing Its Reliance on Delivery Companies


Jan. 25 2019, Updated 11:04 a.m. ET

Amazon has been trying to reduce its dependence on FedEx and UPS

e-Commerce giant Amazon (AMZN) has been trying to reduce its reliance on the likes of FedEx, UPS, and USPS (United States Postal Service).

The company has taken heat from President Donald Trump for using USPS as its “delivery boy” and not appropriately compensating USPS for its services.

As the company’s business grows, it hopes to handle a higher portion of its deliveries to avoid the increasing costs of FedEx and UPS. Amazon already runs its core e-commerce business at extremely thin margins.

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The company is investing billions in its own shipping service

Amazon has introduced Amazon Shipping, its home-delivery service, to ramp up its last-mile logistics. The company is looking to expand the service beyond its test markets of Los Angeles and London.

The company also announced recently that it would be adding to its fleet of jet planes, which will allow it to take charge of its own shipping. Amazon spent $18.6 billion on shipping expenses in the first nine months of 2018, a 30% increase compared to the same period in 2017.

Amazon also recently started testing Scout, its delivery robot. The company is piloting the robot in Snohomish County, Washington. If Scout is adopted more widely, it could increase the company’s options for last-mile delivery.


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