E-commerce giant Amazon is rolling out its own delivery network, wooing shippers with the promise to cut out extra fees and fuel surcharges that drive up the cost of home deliveries, according to a report from The Wall Street Journal.
Amazon has recently expanded its new home delivery service called Amazon Shipping beyond its test markets in London and Los Angeles.
The new home delivery service includes picking up shipments from merchants’ warehouses and delivering them directly to shoppers. The Wall Street Journal indicated this end-to-end service is part of Amazon’s quest to build up its own delivery network and handle more of the millions of items sold through its site.
“If it’s a guaranteed service with none of those surcharges, they’re going to undercut the residential delivery market,” John Haber, chief executive of the supply-chain consultancy Spend Management Experts, told the Wall Street Journal.
Haber said fees can add up to more than 30 per cent of the shipping cost in many cases. One merchant who reviewed Amazon’s shipping rates said they were about 10 per cent lower than UPS and FedEx on average.
The large carriers use the extra charges to cover the added costs of building out their networks to handle the surge in e-commerce packages. Residential delivery, for instance, can have higher costs than delivering to businesses, where multiple items can be dropped off. Fuel surcharges also provide transparency into one of the costs baked into deliveries and can fluctuate.
“The company is always working to develop new, innovative ways to support the small and medium businesses who sell on Amazon, including testing shipping programs that help these businesses get packages to their customers quickly and reliably,” a spokesperson from Amazon said.