Dive Brief:
- Amazon Shipping’s ground service won’t add peak season fees this year, one of the reasons executives said at its annual seller conference this week it has an edge in pricing versus top carriers like FedEx and UPS.
- Most third-party sellers using the relaunched service pay at least 30% less compared to the list rate at other leading carriers, Ripley MacDonald, VP of Amazon Shipping, said in a Wednesday session at Amazon Accelerate. Amazon Shipping offers delivery on orders placed on Amazon.com, sellers' websites and other channels.
- "Plus, we charge fewer fees,” MacDonald added. “No residential surcharges, no extra fees for weekend deliveries.”
Dive Insight:
Amazon Shipping could be an appealing alternative to FedEx and UPS if it delivers on its promise of straightforward rates and a fast claims resolution process, experts have told Supply Chain Dive. Lower rates compared to the parcel delivery giants would be an added draw for shippers that continue to grapple with high shipping costs.
"Carriers are already announcing cost increases for 2024 to the tune of 5.9%, and that's just in base rates, excluding surcharges," said Michael Cox, director of Amazon Shipping, in a Thursday session.
But Amazon Shipping isn't a complete rival to FedEx and UPS yet. Pickups are currently limited to shippers' warehouses in 15 metropolitan areas — a number Cox said will grow with time — and it delivers within the contiguous U.S. only.
"Anywhere Amazon has a facility, we want to be there, so it's just a matter of when," Cox said of pickup locations.
Where Amazon Shipping picks up in the U.S.
Amazon Shipping’s service availability to only Amazon.com sellers in the U.S. is also a limitation, but that's still a sizable customer base to fuel its growth.
Today, 1.9 million businesses sell on Amazon, Cox said. Many of these sellers are searching for fast and reliable delivery services that are still cost-efficient, he added.
Cost pressures increase for shippers during the peak season as FedEx and UPS institute higher surcharges to cover a jump in operating costs. Amazon Shipping will not increase delivery prices this peak season.
However, the service will eventually levy extra peak charges for larger shippers that may "go over capacity with certain criteria, but that's not something that we're doing this year," Cox added.
