50% of Amazon.com's Last-Mile Deliveries Now Done by Amazon

During a recent earnings call, FedEx shared an extremely interesting - and telling - data point with regards to the Last Mile Carrier space in 2019. A graphic in their presentation tells the story:

(Source: FedEx)If you look at the line representing Amazon, you can see a nearly meteoric rise in their share of Amazon.com's last-mile carrier shipments. According to this report, Amazon now does nearly 50% of its own last-mile deliveries. In 2017 alone, Amazon shipped 5 billion packages to Prime members. This trend may seem jarring, but it is actually the culmination of years worth of planning and strategizing on the part of Amazon towards their ultimate goal: becoming a full-fledged carrier. In August of 2019, FedEx formally ended their relationship with Amazon by forgoing their contract with the company for both ground and air. While FedEx's percentage of overall last-mile services for Amazon was relatively small, they clearly saw the writing on the wall. What's most staggering is the massive decrease in utilization of USPS - traditionally their biggest partner - which is directly correlated to the massive increase of Amazon utilizing their own last-mile services. Interestingly, in Spring of 2019 USPS won a case in the Supreme Court in which the US government was allowed to continue to set the prices for USPS; prices that other carriers felt were unfair. The main beneficiary of those low prices has been Amazon, who had been using USPS for the bulk of their last-mile deliveries (as you can see in the graphic). Even with the cost benefits, they were getting from USPS, Amazon still has decided to take on more and more of its own deliveries.

Amazon Carrier: When, not if

All of this makes a lot more sense when you look at the timeline of the last few years - it's now clear that it's not a question of "if" but "when" Amazon will become a full-fledged carrier. That is when they will start delivering packages that are not from Amazon.com. When they do that, the "Amazon Effect" will hit the carrier space full force. The move by Amazon is not sudden, it's been a slow creep for several years:2015

• Amazon launches "Prime Now" 1-hour delivery service
• Acquires a fleet of 20 747s
• Purchases a large fleet of trucks

2016

• Amazon purchases French 3PL Colis Prive
• Amazon China registers as a "Freight Forwarder"
• An internal company memo leaks that fully describes the company's plans to become a carrier
• Considers purchasing an airport in Germany

2017

• Amazon begins testing "Seller Flex" 2-day shipping

2018

• Enlists gig-workers for last-mile delivery
• Hires thousands of workers for holiday season last-mile delivery

2019

• Amazon drops some additional fees and surcharges for shipping
• FedEx effectively ends its carrier relationship with Amazon

Given all the moves Amazon has been making, 2020 might be the year they finally make their intention to become a carrier official.