Amazon’s presence in the transportation and logistics industry continues to grow, now looming over the other major shipping carriers. On top of delivering the majority of its products in its network, Amazon is now shipping outside cargo for USPS. This trend of taking on outside delivery volume is likely to become the eCommerce giant’s next big venture.
Amazon is Shipping 72% of its Own Goods, and Continues Building Its Network
In 2014, Amazon started developing its own global transportation network from scratch, in order to ensure consistent and reliable delivery for its customers. By the year 2019, Amazon was delivering less than 47% of its own packages. Two years later, that percentage has increased to 72% of its own packages. In addition to that figure, 77% of the United States population now lives within one hour of an Amazon warehouse. Therefore, the company can deliver packages to the majority of the country within one day (or the same day.)
Looking at these statistics, it’s clear that Amazon is aiming to become a new kind of US Postal Service for the digital age. The company’s own logistics network is enormous, featuring 400,000 drivers, 40,000 semi trucks, 30,000 vans, and 70+ planes based out of its own Prime Airport in Kentucky.
Bernie Thompson, Founder and CEO of Plugable Technologies (an Amazon seller), said the following in an interview with CNBC:
“I don’t think anybody in the industry would be surprised if this enormous capacity that Amazon has built out…if they use that to offer shipping services that would compete directly with somebody like UPS or FedEx.”
It’s Not a “One Size Fits All” Approach for Shipping Outside Cargo
Despite the rapid growth, Amazon still relies on USPS and UPS for more than 25% of its deliveries…for now. However, Amazon has also already started transporting cargo on its planes for USPS. Amazon also already offers shipping services for non-Amazon orders in the United States, as well.
When taking on outside cargo and packages from out of its network, Amazon is all about optimization. The company’s strategy isn’t a “one size fits all” approach, where they accept any packages going to any destination. Instead, Amazon cherry-picks the most profitable routes they want to run, as well as the most profitable parcel sizes.
As time goes on, it’s only logical to assume that Amazon will continue delivering more of its own products, while also taking on more outside cargo. Thus, the eCommerce giant may soon became a major shipping carrier in its own right—if it isn’t already.