Amazon has a secret plan to replace FedEx and UPS called 'Consume the City'
Amazon has been quietly beefing up its own shipping logistics network lately.
Although Amazon publicly says it's meant to complement existing delivery partners, like FedEx and UPS, a new report by the Wall Street Journal's Greg Bensinger and Laura Stevens says Amazon has broader ambitions.
Eventually, Amazon aims to build a full-scale shipping and logistics network that will not only ship products ordered from Amazon, but will also ship products for other retailers and consumers.
In other words, Amazon is looking to complete against delivery services like FedEx and UPS, the report says. Internally, some Amazon execs call the plan "Consume the City."
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Here are other new details around Amazon's logistics plan, according to the report:
- Amazon recently hired former Uber VP Tim Collins as VP of global logistics
- It recruited dozens of UPS and FedEx executives, and hundreds of UPS employees in recent years
- Test trials for last-mile deliveries are running in big cities like LA, Chicago, and Miami
- It also experimented with a program called "I Have Space" to store Amazon's inventory in warehouses owned by other companies
On top of that, InternetRetailer.com recently reported that Amazon has hired Ed Feitzinger, the former CEO of UTi Worldwide, one of the largest supply chain management companies, as VP of global logistics. Add that to the fact that Amazon has now built facilities within 20 miles of 44% of the US population, and Amazon is starting to look like a real threat to existing logistics networks.
According to Baird Equity Research, Amazon is looking at a $400 billion market opportunity by launching all these initiatives. It could also help Amazon reduce some of its shipping costs, which has been increasing every year.
Industry people are starting to take notice too, according to Zvi Schreiber, the CEO of Freightos, the online marketplace for international freight.
"After dominating e-commerce and warehousing, Amazon is moving farther up the supply chain and eyeing the logistics sector from all angles, particularly looking to leverage technology, capital and manpower to make logistics more efficient," Schreiber told Business Insider.
"Given their track record of disrupting industries — from retail to warehousing and ecommerce fulfillment to cloud computing — the trillion dollar industry freight industry is certainly tracking Amazon nervously."
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