Amazon Testing Its Own Parcel Delivery Network, Says WSJ

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Amazon is in the process of testing its own delivery network to help complete the last stage of delivery in a package’s trip from factory to buyer, the Wall Street Journal reports. The e-commerce giant is using Candlestick Park in SF, as well as facilities in Los Angeles and New York, as bases of operation for Amazon trucks and contracted drivers. Self-delivery would be a huge step towards giving Amazon even more control over its sales empire, and yet another threat to brick-and-mortar retail.

Amazon’s shipping costs are ballooning quickly, as the company gets bigger and serves more customers – last year alone it grew 29 percent, and relative to its total sales numbers, it’s been growing every year since 2009, the WSJ notes. Amazon can also use its own delivery team to more easily deliver same day, and to potentially deliver on holidays and weekends when service from carrier partners, including UPS, FedEx and the U.S. Postal Service, might not necessarily be available or might be cost-prohibitive.

It shouldn’t surprise anyone that Amazon is at this stage of testing its own delivery service – competitors including Wal-Mart and Google are already exploring their own delivery networks, too. Already in the UK, Amazon does its own last-mile delivery, as CEO Jeff Bezos revealed in a shareholder letter earlier, too. For these efforts, it generally uses local couriers and packages products in its own, Amazon Logistics packaging.

In the U.S. implementation, it’s not clear exactly how the so-called “last mile” deliveries stem from the larger shipments brought in from regional distribution hubs. Amazon’s use of the program ramped up quickly after packages sent via carriers, including UPS and FedEx, failed to meet their pre-Christmas delivery deadlines last year, which led to the retail giant offering $20 credits to any customers affected.

Amazon’s own delivery network is by no means something that it’ll switch to for sure down the line. There’s evidence to suggest that its early efforts aren’t all that successful (including complaints in online forums), and it’s likely that existing parcel carriers will remain the mode of choice for years to come. But Amazon clearly foresees a time when it might not be able to cost-effectively lean on others while remaining as competitive as it needs to be in the growing e-commerce market. That in itself is an interesting development.