Business

Amazon Doesn't Need Drones to Take Over Shipping Business

Message to UPS and FedEx: Amazon is coming for you. Amazon is testing out plans to enter the shipping business and compete with those goliaths, sleuths at The Wall Street Journal report.

By Eric Levenson
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Message to UPS and FedEx: Amazon is coming for you. Amazon is testing out plans to enter the shipping business and compete with those goliaths, The Wall Street Journal reports. The Journal spotted several Amazon trucks sitting in a parking lot in San Francisco, loading Amazon products and helmed by Amazon-hired drivers.

Though the plan is still in its preliminary stages, the company is testing a delivery service in San Francisco, Los Angeles, and New York that would cover the "Last Mile," as the program is called, of shipping locally. That would allow Amazon to better reach its end-goal of same-day shipping, what The Journal calls the "holy grail of e-commerce."

In addition, the need for Amazon to keep its shipping in-house was never more obvious than in UPS's failures to deliver Amazon customers their orders on time during the Christmas shopping season. "Rather than depend on a handful of third-party delivery services that they can’t completely control, the nation’s largest online retailers are already looking for alternatives," Wired noted then. For Amazon, those alternatives will come from within the company.

Conveniently, the shipping plans came out the same day as Amazon's shaky earnings report. Partly because of expensive shipping costs, the company had just modest profits this quarter — they netted just over $100 million on $19 billion in revenue — giving the "Last Mile" program even more importance. And having quicker delivery service plans in place would also help justify the price raise from $79 to $99 for Amazon Prime.

So no, the plan to use local trucks isn't quite as futuristic or sexy as its overhyped drone program. But unlike sky packages, this one actually has a chance to come to fruition and truly revolutionize the business.

This article is from the archive of our partner The Wire.