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Stock Market Trend Forecast Oct - Dec 2019 by Nadeem Walayat

Amazon Could Soon Be the World’s Biggest Shipping Company

Companies / Amazon Sep 25, 2019 - 02:19 PM GMT

By: Stephen_McBride

Companies Amazon (AMZN) kicked off the internet shopping boom in the ‘90s when it started shipping books.

These days, you can click a button and get almost anything delivered to your door.

Amazon sold $164 billion worth of stuff on its website this year.

If there were a disruptor stock hall of fame, Amazon would be first in line.

But Amazon didn’t disrupt shopping alone. Goods can’t ship themselves.



America’s two largest delivery companies—UPS (UPS) and FedEx (FDX)—got all that “stuff” from sellers to buyers.

It won’t surprise you to learn the online shopping boom has been wonderful for their businesses. Their revenues have almost tripled since 2000, to a combined $140 billion.

But the days of these companies are numbered…

Amazon Is Quietly Spinning Its Own Delivery Web

Let me show you an important picture...


These are cargo planes with “Prime Air” written on the side.

They’re AMAZON cargo planes.

No company in the world spends more on shipping than Amazon.

It spent $27 billion to ship stuff last year!

And it’s one of UPS’s largest customers, making up roughly 10% of its sales.

But over the past couple of years, Amazon has been working on a project that should terrify UPS and FedEx...

It has quietly blanketed America with its own delivery web.

Today, Amazon operates almost 400 distribution warehouses in the US alone. And these are no run-of-the-mill post offices.

Many span millions of square feet. Inside, swarms of “Pegasus” robots whizz around carrying stacks of items.

And did you know Amazon has built up a 20,000-strong fleet of delivery vans?

It also owns 60 cargo planes like the ones you see above.

Amazon’s growing “logistics wing” now ships 1 in every 5 deliveries in the US.

And 60% of Amazon parcels are now delivered by Amazon drivers.

UPS, FedEx and Other Carriers Are in Great Danger

As I mentioned, UPS only gets around 10% of its sales from Amazon. While FedEx counts on Amazon for less than 2% of its business.

So many folks conclude Amazon’s creation of its own delivery service won’t hurt these companies too much.

These folks don’t know their Amazon history.       

Back in 2000, Amazon was on its way to dominating online shopping. As its website exploded in popularity, so too did its need for computing power.

So it started renting giant warehouses and packing them full of supercomputers. Its stated intention was to “supplement” its internal need for computing power.

Today that has morphed into Amazon Web Services (AWS)—the world’s largest cloud computing business. Which, in short, involves selling computing power to other companies.

Last year, AWS raked in $26 billion. And get this… it made up 60% of Amazon’s profits!

So it caught my eye when Amazon recently said its growing delivery arm will “supplement” existing delivery methods...

Amazon Already Ships Goods for Third-Party Sellers

Sure, Amazon will first take care of its own delivery needs.

But I’ll bet anything that Amazon will soon start selling its delivery services to others—just like it did with its cloud business.

In fact, Amazon now calls UPS and FedEx competitors in its annual report.

Amazon recently launched its new “Shipping with Amazon” service.

In short, Amazon’s drivers will now pick up packages from “third-party sellers” who sell stuff on Amazon.

It will then deliver that stuff to buyers, cutting out the need for delivery services like FedEx or UPS.

What are the chances Amazon opens up “Shipping with Amazon” to everyone in a year or two?

For my money, it’s a dead certainty.

Can UPS and FedEx Survive?

It’s bad enough that the most disruptive company in history is invading UPS and FedEx’s turf.

It’s even worse that many of America’s most powerful companies are following suit.

The world’s largest retailer, Walmart (WMT), now runs over 6,000 of its own delivery trucks. It has spent over $2.5 billion on its “logistics wing” in the past two years.

Home improvement superstore Home Depot (HD) is investing billions into delivering its own products, too.

UPS and FedEx have a big problem: They are the ultimate “middlemen.”

As my readers know, middlemen can always be cut out.

Don’t be surprised if your UPS guy begins stopping by a lot less...

And delivery guys from Amazon, Walmart, and Home Depot start stopping by a lot more.

The Great Disruptors: 3 Breakthrough Stocks Set to Double Your Money"

Get my latest report where I reveal my three favorite stocks that will hand you 100% gains as they disrupt whole industries. Get your free copy here.

By Stephen McBride

http://www.riskhedge.com

© 2019 Copyright Stephen McBride - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


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