Amazon is delivering more than half of all the Amazon packages going out in the United States, according to CNBC and The Verge. At the current rate, Amazon will pass up both FedEx and UPS in U.S. package volume, currently delivering 2.5 billion packages per year compared to 3 Billion for FedEx and UPS at 4.7 billion packages. Over the past year, Amazon's number of packages they delivered themselves doubled.
Over the past year, the number of packages Amazon delivered went from 20% to about 50%. A large contributing factor to Amazon's jump in self-deliveries is their new one-day Prime shipping initiative, which launched earlier this year, with the promise to bring this service to more markets and more products as time goes on.
Because Bezos Says So
Speaking about one-day Prime shipping turnover in October, CEO of Amazon and space cadet Jeff Bezo said, "Customers love the transition of Prime from two days to one day — they’ve already ordered billions of items with free one-day delivery this year. It’s a big investment, and it’s the right long-term decision for customers." It goes without saying that, for Jeff and his company, it's not about just getting packages to more customers at greater speed.
The goal is to own the whole chain from when a product arrives at an Amazon factory and/or Amazon subsidiary, to the last mile delivery to the customer's doorstep. This last mile has always been tough for commerce companies to successfully accomplish themselves.
Billions And Billions
It also goes without saying that Amazon wants to stop paying tens of billions of dollars, to FedEx, UPS and other shipping companies, which they have been paying since their inception. The e-commerce giant has been distancing itself not just from those types of contracts, but also pulling away from large transport companies by sea and air. Having launched Prime Air in 2016, which is comprised of drones and a fleet of cargo planes, it has steadily been adding more planes to its fleet since its inception.
Amazon also ended their FedEx contracts for ground shipping and air transport earlier this year. Amazon is still on the truck with UPS, but has been building up steam and drivers with its Amazon Flex platform, a sort of on-demand contract network similar to Uber. However, Amazon Flex has been reported to be terrible because of the high demands it places on its drivers, which have directly contributed to automobile fatalities.
Spend Money To Make Money
This transition to full-on logistics provider has, however, also been costing Amazon upwards of $9.6 billion on fulfillment alone. For a company with so many billions to spend, this is a worthwhile business expense which will save the e-commerce megalith money in the future.