‘Amazon remains a meaningful long-term risk,’ warns a UBS analyst on Amazon’s UPS-FedEx rivalry as the growth of Amazon’s delivery operations is posing a direct competition to both suppliers.
Thomas Wadewitz, analyst for UBS, said: “While the path is increasingly clear, the velocity is more difficult to gauge,” analyst Thomas Wadewitz said. “There is still likely a meaningful timeframe of limited direct impact.”
UPS and FedEx have limited options to fight against Amazon’s logistics growth. Even if both suppliers were to put up their prices during the peak periods, said Thomas, “the efficacy of pushing these levers may be limited as higher delivery cost from the three network players provides greater incentive for Amazon to invest even more aggressively in its own package delivery capability.”
However, Thomas said that there is a meaningful period of time when competition from an Amazon package delivery offering is unlikely to be broad enough to have a direct impact on UPS and FDX. He predicts that the transition of Amazon to a dominant logistics player is “likely to be gradual.”
This news comes as FedEx have dismissed Amazon as a rival, as they pointed to the marketplace’s lack of delivery service knowledge which would be “needed to compete.“
2 Responses
Amazon controlling its !logistics will give it the edge over competing companies such as Wal-Mart and other retailers. It can be expected that over time Amazon will build a large enough logistics network to provide this service to other companies. Where the profit margin of this will offset its own delivery costs.
Walmart, Target, Maceys and all the others will be at the mercy of FedEx and ups which will raise their prices every year. Where as Amazon delivery costs will go down every year because the profit Amazon will make on delivering other companies goods will offset the cost of Amazon delivering its own goods under prime. Which means that prices on Amazon goods via its website will always be cheaper than Wal-Mart and Target.
its simple
create your own marketplace !!!
i can’t believe the likes of Royal Mail can’t figure this out.
All of us would run to another platform and with the brand awareness of RM or UPS . Customers would buy.