According to the Seattle Times, e-commerce giant Amazon is entering the package-delivery market, and within several weeks, it will be competing directly with UPS, FedEx and DHL. Amazon is entering this space by way of acquisition of a French company named Colis Privé. This move is part of a larger, growing investment in numerous companies in the logistics industry, including a U.K. parcel delivery company – Yodel, for example.
With the opportunity to disrupt the market, what makes this investment so intriguing is that Amazon “may be developing a delivery service that meets more than its own shipping needs. He [Robert W. Baird & Co.] expects Amazon to ultimately offer any excess cargo capacity it has to other companies looking to transport goods.” These services would be open for use to even Amazon’s competitors.
The reason Amazon is going in this direction? Making money by improving infrastructure and then rolling it out as a service. The article explains that what would be considered as an expense right now can effectively be turned into a profit center. The additional profits can help drive competitive rates in its retail business, making them more competitive. Clearly Amazon’s ability to look at its entire portfolio strategically is one of its core strengths.
Interestingly, while FedEx has not publicly shown a lot of concern about this potential issue, UPS has been much more forthcoming and admits that there could be conflict ahead. We’ll have to see what happens in 2016.