Amazon will finally launch its shipping service for businesses in LA in the “coming weeks,” according to a new report from The Wall Street Journal. The service, dubbed Shipping with Amazon or SWA, will directly compete with companies like Fedex and UPS. However, it will be initially restricted to companies selling goods on Amazon’s own marketplace.
Shipping with Amazon is not a new project for the company. For years, the e-commerce giant has been building out its delivery infrastructure, expanding into ocean freight, leasing its own cargo planes, finding ways to deliver packages inside your house with Amazon Key, and even planning for the future with its drone delivery initiative. Despite all this, though, the company isn’t ready to go toe-to-toe with established firms, which spend billions each year just upgrading their existing networks.
For that reason, Shipping with Amazon is starting small. So far, it’s been tested in various pilot programs, including in London, and this initial launch is said to be limited to Los Angeles. The WSJ reports that Amazon plans to then “expand the service to more cities as soon as this year,” but doesn’t report a time-frame for doing so. Amazon already delivers at least some of its own orders in 37 American cities, but still relies on the likes of the U.S. Postal Service to fill in the gaps in its coverage.
For those who study Amazon’s business model, SWA looks awfully familiar to the tech giant’s hugely successful cloud computing business, AWS. With AWS, Amazon first built out infrastructure that could service its own needs, and, once that was established, began selling the same tools to third parties. SWA could be on a similar track.
As independent analyst Ben Thompson put it, Amazon’s ultimate goal “is to take a cut of all economic activity.” AWS lets Amazon siphon some of the profits of digital businesses by selling them the infrastructure they need to reach their customers, and SWA could do something for companies with physical products to deliver
There’s no guarantee, of course, that SWA will succeed like AWS given the hugely different demands of running cloud and shipping businesses. But Amazon is at least going with a tried-and-tested method to out-compete its rivals, and wants to steal business from UPS and Fedex by undercutting them on price.