UPS and FedEx are tumbling after Amazon says it’s going into shipping



Shares of the two largest US shipping companies, UPS and FedEx, are tumbling after the Wall Street Journal reported that Amazon will launch a competing package delivery service known as SWA, or “Shipping with Amazon.”

UPS was down more than 6% in early trading Friday, while FedEx was off 5%.

Shock-worthy facts about Amazon:

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7 shock-worthy facts about Amazon
7.5 percent of Seattle's working-age population are Amazon employees

Amazon has more than 300,000 employees worldwide, and 40,000 in Seattle alone.

As a portion of the city's working-age population — roughly 528,000 — that comes out to 7.5% of the city working at Amazon.

For perspective, if the same portion of New York City's adults worked for one company, that company would have about 488,000 locals on staff.

Amazon accounts for 43% of all online sales

Amazon used to be a way to buy books online; today, it's the default buying site for just about everything, especially for people who have Amazon Prime.

An analysis by Slice Intelligence released in February found that 43% of all US online retail sales were done through Amazon in 2016.

That's up from 33% in 2015 and 25% in 2012.

1 out of every 4 US adults has Amazon Prime.

Speaking of Amazon Prime, the company now counts approximately 63 million people among its subscriber base, or about 25% of the total US adult population.

That number may underestimate the true coverage, however, since it doesn't account for multiple adults in one household all sharing the same Prime account.

Amazon ships 1.6 million packages a day

Amazon fulfillment is a beast of its own.

A report from 2013 (the latest year for which data are available) found Amazon shipped 608 million packages that year, or 1.6 million packages a day.

As of 2015, Amazon estimated its fulfillment centers were within 20 miles of 31% of the US population, and within 20 miles of 50-65% of its core, same-day-accessible market.

That's enough cardboard to span all of West Virginia

A back-of-the-envelope calculation reveals all those packages (not including padded envelopes) yield roughly 26,400 square miles of cardboard.

The total land area of West Virginia, meanwhile, is just north of 24,000 square miles.

Given the speed of Amazon's shipments, the company could blanket the whole US in cardboard in about five months.

45,000 robots roam the floors of Amazon's warehouses

To help those shipments leave the warehouses on time, Amazon relies on a growing fleet of autonomous robots that fetch packages from their shelves and bring them to human employees.

The 45,000 robots live across 20 fulfillment centers in the US. In 2016, the company increased the fleet 50% from its prior head count of 30,000.

Amazon is more valuable than all major brick-and-mortar retailers combined

The sum total of those investments in infrastructure and supply chain management have made Amazon by far the most valuable retailer in the United States.

Amazon's $356 billion valuation is so big, it's larger than Wal-Mart, Target, Best Buy, Macy's, Kohl's, JCPenney, and Sears combined.

With the recent acquisition of Whole Foods, there are no signs the retailer has any plans of slowing down.

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Amazon has flirted with shipping its own packages for a while now, most recently in October 2017, when shares of UPS and FedEx fell on news of a program called “seller flex,” in which Amazon would deliver packages on behalf of third-party sellers on the site.

It wasn’t immediately clear how much of an effect losing Amazon’s business will have on FedEx and UPS. In 2016, FedEx VP of Market Development Michael Glenn said Amazon accounts for just 3% of the Memphis-based carrier’s revenue.

UPS, on the other hand, carries about 30 percent of Amazon’s total US shipments — roughly $1 billion of annual revenue. That’s only 1.5% of the Atlanta-based carrier’s $65.87 billion 2017 revenue.

SWA will roll out in Los Angeles over the next few weeks, according to the Wall Street Journal, and will then spread to other cities around the US over the course of the year.

The move further expands Amazon's recent push into logistics and delivery, following the company's leasing of aircraft and ocean freight equipment.

Amazon's creation of the new delivery service comes as the company pushes into new avenues of business including the acquisition of grocer Whole Foods and a newly-announced joint healthcare venture with JPMorgan and Berkshire Hathaway.

Shares of Amazon were up just less than 1% in early trading Friday.

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See Also:

SEE ALSO: Amazon is launching a package-delivery service to compete with FedEx and UPS

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