Amazon’s Shipping Empire Is Challenging UPS and FedEx • Hacker News Board

Re: Amazon’s Shipping Empire Is Challenging UPS and FedEx

#31

Post by pmart123 » Thu, Sep 05, 2019, 1:47 PM UTC

mytailorisrich wrote: post #11

TazeTSchnitzel wrote: post #8

It's good for Amazon, but is it good for consumers? Isn't a postal service something of a natural monopoly — the more competing services there are, the less efficient each is, because instead of one vehicle with one load of deliveries, you have two or more vehicles with fractions of that amount? It's certainly not good for the environment at least.

Natural monopoly means that it's not possible for more than one supplier to survive. This is clearly not the case for packages delivery. For consumers the more suppliers the better.

I think what he means is sometimes there is a benefit to having one service provider. For instance, it is cheaper if a city offers trash pickup in a district to one service provider. The logic is that it’s much more efficient to have one truck stop at each house versus trucks zig zagging around each other.

Re: Amazon’s Shipping Empire Is Challenging UPS and FedEx

#32

Post by gumby » Thu, Sep 05, 2019, 1:54 PM UTC

mcpherrinm wrote: post #4

devoply wrote: post #2

I could see a future where Amazon does general shipping like FedEx as a side business to subsidize its real business.

Much like AWS spun out of their in-house experience running flexible computing infrastructure, this would be a natural fit for them to flex their logistics strengths. Via their multi-channel fulfillment offerings, you can already use Amazon's logistics network to ship your products sold on or off of Amazon. This would just be supporting more type of shipments than just fulfillment. On the other hand, Fedex, DHL, UPS…

> Much like AWS spun out of their in-house experience running flexible computing infrastructure

Actually that’s a myth (https://www.networkworld.com/article/2891297/the-myth-about-... ). Oddly, unlike most corporate founding myths (e.g. eBay and Pez) it wasn’t invented by company marketing.

Re: Amazon’s Shipping Empire Is Challenging UPS and FedEx

#33

Post by Nasrudith » Thu, Sep 05, 2019, 1:55 PM UTC

Shivetya wrote: post #17

I just find it amazing that Amazon found it more profitable to buy tens of thousands of delivery vehicles and build a service from the ground up than to find better deals through the available shippers. Now I see their trucks nearly as often as Fed Ex and UPS.

Well the main reasons for not going horizontal are scale and volatility - which ammount to fixed costs essentially. If they can make a profit off of it then that implies cutting out the middlemen can potentially reduce expenses.

That said that they are /still/ smaller than Wallmart yet have scale sufficient to be competitive to mass shippers is amazing even considering the internet related physical letter shrinkage.

Re: Amazon’s Shipping Empire Is Challenging UPS and FedEx

#34

Post by gumby » Thu, Sep 05, 2019, 1:57 PM UTC

Ronald Coase would have loved Amazon and in particular this case. Amazon is quite unconventional in regards to what they choose to outsource and what they keep — or bring — in house.

Re: Amazon’s Shipping Empire Is Challenging UPS and FedEx

#35

Post by thesuperbigfrog » Thu, Sep 05, 2019, 1:57 PM UTC

Shivetya wrote: post #17

I just find it amazing that Amazon found it more profitable to buy tens of thousands of delivery vehicles and build a service from the ground up than to find better deals through the available shippers. Now I see their trucks nearly as often as Fed Ex and UPS.

For most of Amazon's existence they have been getting the best deal that they can with the available shippers, primarily UPS, FedEx, and USPS in the US. They negotiated lower rates than the shippers offer to consumers and businesses in exchange for guaranteed delivery volumes. Basically Amazon promised to ship X million packages per week with shipper Y in exchange for "below market" rates.

The issues that Amazon has seen, particularly during holiday peaks is that shippers do not always want to continue to lower their rates and that shippers do not always scale up their operations to meet Amazon's needs during the holidays. For example: https://www.latimes.com/business/la-fi-christmas-shipping-de... and https://www.washingtonpost.com/business/economy/amazon-ups-o...

In response to shippers not doing what they want and to provide leverage, Amazon started to do their own shipping. This originally started as same-day delivery experiments in large cities as part of Amazon Fresh (grocery delivery service). It grew into non-grocery deliveries as a competitive advantage for Prime same-day deliveries and expanded from there.

I expect that "Transportation By Amazon" (TBA) where Amazon does package delivery as a competitor to UPS and FedEx will probably start in the next year or two, barring any anti-trust or legal problems.

Re: Amazon’s Shipping Empire Is Challenging UPS and FedEx

#36

Post by gruez » Thu, Sep 05, 2019, 2:02 PM UTC

rerx wrote: post #21

TazeTSchnitzel wrote: post #8

It's good for Amazon, but is it good for consumers? Isn't a postal service something of a natural monopoly — the more competing services there are, the less efficient each is, because instead of one vehicle with one load of deliveries, you have two or more vehicles with fractions of that amount? It's certainly not good for the environment at least.

I feel delivery companies should bid for providing service for the last couple of kilometers, then the winner should get an exclusive contract for some time frame. That's how it's done for other services like regional rail public transport.

>That's how it's done for other services like regional rail public transport.

Ask any Brit how privatized rail's working out for them.

Re: Amazon’s Shipping Empire Is Challenging UPS and FedEx

#37

Post by rerx » Thu, Sep 05, 2019, 2:11 PM UTC

gruez wrote: post #36

rerx wrote: post #21

Earlier quoted context omitted.

I feel delivery companies should bid for providing service for the last couple of kilometers, then the winner should get an exclusive contract for some time frame. That's how it's done for other services like regional rail public transport.

>That's how it's done for other services like regional rail public transport. Ask any Brit how privatized rail's working out for them.

Regional rail works okayish in Germany. A part of the regions and lines are carried by private business, others by the former monopolist that is still fully owned by the state.

Re: Amazon’s Shipping Empire Is Challenging UPS and FedEx

#38

Post by reviel » Thu, Sep 05, 2019, 2:25 PM UTC

pwython wrote: post #29

Shivetya wrote: post #17

I just find it amazing that Amazon found it more profitable to buy tens of thousands of delivery vehicles and build a service from the ground up than to find better deals through the available shippers. Now I see their trucks nearly as often as Fed Ex and UPS.

I live in a South Florida county that has about 2 million people. I've never seen an Amazon truck before? The only shipped-by-Amazon deliveries I've received were from people in their own cars.

I do as well and I see them all the time in my area.

Re: Amazon’s Shipping Empire Is Challenging UPS and FedEx

#39

Post by saltminer » Thu, Sep 05, 2019, 2:29 PM UTC

thesuperbigfrog wrote: post #28

devoply wrote: post #2

I could see a future where Amazon does general shipping like FedEx as a side business to subsidize its real business.

"Transportation By Amazon" (TBA) has been a concept at Amazon since around 2010 or so. Originally the concept was that Amazon would accept shipments from business customers and inject those shipments into Amazon's sorting and shipping network using the rates negiotated with various carriers. Since most of Amazon's negiotated rates with carriers are lower than what carriers offer to consumers directly, customers get l…

Given how often I've had packages thrown haphazardly by Amazon drivers, I will gladly pay extra to have USPS handle my packages with slightly more care. It's an interesting idea, but their drivers are destroying their image before they've entered the market.

Re: Amazon’s Shipping Empire Is Challenging UPS and FedEx

#40

Post by Nasrudith » Thu, Sep 05, 2019, 2:35 PM UTC

rerx wrote: post #21

TazeTSchnitzel wrote: post #8

It's good for Amazon, but is it good for consumers? Isn't a postal service something of a natural monopoly — the more competing services there are, the less efficient each is, because instead of one vehicle with one load of deliveries, you have two or more vehicles with fractions of that amount? It's certainly not good for the environment at least.

I feel delivery companies should bid for providing service for the last couple of kilometers, then the winner should get an exclusive contract for some time frame. That's how it's done for other services like regional rail public transport.

Why exclusive contract? What is gained? Rail right of way is exclusive just from geometry and there are various historical "accidents" involved in ownership from no longer relevant reasons but there are myraid ways to deliver mail which may or may not be excluding.

A forced bidding system seems to give gameability and artifical barriers to entry for little gain. To give an anchhacic example of the sort of problems it would be akin to requiring a business that can serve all of New York City competively before bidding. Having a mail room in the lobby of a large apartment would violate that due to serving only residents.