Amazon’s New Low-Rate Ground Service

Amazon’s New Low-Rate Ground Service

Amazon Carrier

The last few weeks have not been great for Amazon, the company released a dismal quarterly report showing that earnings had slipped in Q3 by 26%. While the stock price has gained much of the 13% loss it suffered in the immediate aftermath, it was still a big blow to the company.

However, there were some interesting news that came in the wake of the release, especially in the world of shipping – the company has begun offering a special service for certain high-volume customers in which ultra-low rates (as low as $3 per parcel) would be applied for shipments below 50 lbs, traveling long distances.

How the Program Works

It is rumored that the new service will be available for packages that weigh less than 50 lbs and cubed out to less than 24 cubic inches.

The service will include Monday through Friday pickups, with deliveries available 7 days a week.

In terms of cost for pickup, though Amazon denies that there is any cost, some customers have reported a charge of $10.

Why It’s an Important Development

At this point, Amazon has not really been hiding its intentions with regards to shipping – they are marching full steam ahead into the carrier space. From the large trucks you see on the highways, to the Amazon-branded minivans delivering goods directly to your door. There’s no doubt that Amazon will eventually be competing with legacy carriers like UPS and FedEx.

And Amazon has already made huge strides in this regard. According to a 2019 earnings report by FedEx, Amazon is now doing a full 50% of its own last-mile deliveries.

Source: FedEx

This change has a direct, negative correlation with USPS’s share of Amazon’s last-mile shipping.

What makes this program even more ground-breaking is that it’s not only for Amazon sellers but people who sell on other eCommerce sites as well, putting sites like eBay and Shopify on notice, along with their carrier partners.

The Carrier Wars Move Full Steam Ahead

This move by Amazon is just the latest in a string of developments in the carrier world that individually wouldn’t mean much, but taken together point to a clear sea change.

In January 2019, FedEx launched the pilot of its bulky-item “white glove” delivery service, with a major focus on servicing eCommerce deliveries of large items (like furniture, exercise equipment, etc.). The pilot was apparently successful, and the company announced the full launch in October.

In June of 2019, FedEx formally ended its entire relationship with Amazon, further supporting the idea that Amazon is looking to take on carriers directly.

In July, UPS announced it would be moving to providing 7-days-a-week deliveries, in order to compete with FedEx which made a similar announcement earlier.

It’s clear that carriers are seeing that they are losing ground to Amazon for deliveries, both for the lost business from, but also regarding a future in which Amazon will compete directly against them for shipping from other sources.

Intelligent Audit provides its clients with a global, all-mode transportation audit, recovery, freight payment, and business intelligence reporting partner.

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