Amazon Builds “Its Own UPS”
To the casual observer, Amazon’s dramatic expansion amid the COVID-19 pandemic may suggest a live-action version of Pac-Man from the early days of video games: an insatiable entity consuming everything in its linear path. However, Bloomberg News reported that at least one aspect of that expansiveness is a bid to take on a competitor: Walmart.
Specifically, Amazon plans to open 1,000 small delivery hubs in cities and suburbs all over the U.S., Bloomberg reported. The facilities, which will eventually number about 1,500, will bring products closer to customers, making shopping online about as fast as a quick run to the store.
“Historically, Amazon gnawed away at brick-and-mortar rivals from warehouses on the exurban fringes, where it operated mostly out of sight and out of mind,” reported Bloomberg. “That worked fine when the company was promising to get products to customers in two days.
“Now Walmart and Target Corp. are using their thousands of stores to beat Amazon at its own game by offering same-day delivery of online orders. Walmart also recently started its own Prime-style subscription service, upping the competitive ante.”
A recently opened delivery hub in Holyoke, MA, exemplifies Amazon’s response. “Located not far from a once-vibrant mall, it’s just a short drive from more than 600,000 people,”Bloomberg reported. “The goal is to creep closer to almost everyone in the U.S.”
Beyond Amazon’s retail rivals, the mass opening of small, quick-delivery warehouses also represents a threat to United Parcel Service and the U.S. Postal Service. “Being fastest in the online delivery race is so critical to Amazon’s business that it doesn’t trust the job to anyone else and is pulling back from these long-time delivery partners,” reported Bloomberg. Amazon is basically duplicating UPS’s logistics operation.” Many of the new hubs are within walking distance of UPS facilities, according to Bloomberg.
“In just a few years, Amazon has built its own UPS,” Marc Wulfraat, president of the logistics consulting firm MWPVL International Inc., told Bloomberg. “Amazon keeps spreading itself around the country, and as it does, its reliance on UPS will go away.”
Although Amazon declined to comment on the delivery-hub expansion plans, it has said its last-mile delivery efforts are meant to supplement, not replace, its long-time partners. “Our dedicated last-mile delivery network just delivered its 10 billionth package since launching over five years ago, and we’re proud to provide a great service for our customers,” a spokeswoman told Bloomberg.
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