Amazon launched a new business that opens its entire logistics network to outside companies — sending shares of UPS and FedEx tumbling and marking the latest example of the tech giant under CEO Andy Jassy turning its internal capabilities into products and services for sale.
Amazon Supply Chain Services, announced Monday morning, brings together the company’s freight, distribution, fulfillment, and parcel shipping operations into a single offering available to any business, regardless of whether they sell on Amazon’s marketplace.
Initial customers include Procter & Gamble, which is using Amazon’s freight network to transport raw materials; 3M, which is using it to move products to distribution centers; Lands’ End, which is fulfilling orders across sales channels from Amazon’s warehouses; and American Eagle Outfitters, which is using Amazon’s parcel service for last-mile delivery.
The service can fulfill orders placed through platforms that compete with Amazon’s own marketplace, including Walmart, Shopify, TikTok, and others.
Shares of UPS dropped nearly 10% and FedEx fell more than 9% in trading early Monday. Amazon’s stock rose slightly. Amazon had already surpassed both carriers to become the nation’s largest parcel shipper by volume, according to parcel-analytics firm ShipMatrix.
Peter Larsen, vice president of Amazon Supply Chain Services, compared the launch to the origins of Amazon’s cloud business. Larsen, an 18-year Amazon veteran who previously led internal transportation and delivery technology operations, said Amazon is bringing its supply chain to outside businesses “much like Amazon Web Services did for cloud computing.”
In addition to putting Amazon in competition with existing players in the logistics industry, the move also raises questions about data privacy. Amazon has faced accusations of using nonpublic seller data to compete against merchants on its marketplace, which it has denied.
Larsen told the Wall Street Journal that the company prohibits using supply chain customer data for its own marketplace decisions, noting that hundreds of thousands of Amazon sellers already trust the company to fulfill orders placed on rival platforms.
The launch follows a recent pattern of Amazon reviving its tradition of turning internal capabilities into external businesses.
In shipping, the company is not exactly starting from scratch: Amazon’s logistics network includes more than 200 fulfillment centers in the U.S., more than 80,000 trailers, 24,000 intermodal containers, and 100 aircraft. The company says it delivers 13 billion items annually.
Amazon did not disclose specific pricing for the new Amazon Supply Chain Services, saying costs will vary based on the services businesses use.
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