There was a notable change in Amazon.com‘s annual report this year. Under the competition section of its 10-K, Amazon listed “companies that provide fulfillment and logistics services.”
Previously, Amazon had always considered FedEx and UPS partners. But the company is moving more and more of its shipping needs in-house. On the fourth-quarter earnings call, CFO Brian Olsavsky said the online retailer can ship many packages itself for less than it’d have to pay a third party.
Since the start of the year, Amazon has been making investments in potential solutions for last-mile delivery, as well as expanding its Prime Air network, buying more planes and developing its airport hubs. Here’s what it’s been up to and why its moves should scare FedEx and UPS.
Automating the last mile
The biggest bottleneck in any logistics operation delivering packages from a fulfillment center to a customer’s doorstep can be the last mile. This can often be the most costly part of a delivery. Amazon, FedEx, and UPS often fall back on the U.S. Postal Service to deliver packages where their own networks fall short but the government mandate ensures packages get delivered.
Amazon has made several investments in last-mile delivery recently.
- It started testing Scout, a robot about the size of a cooler, to deliver packages autonomously in a suburb north of Seattle.
- It participated in a venture capital round to fund Aurora Innovation, an autonomous-vehicle company.
- It’s also in talks to invest in Rivian, an electric-vehicle company.