Apps & Consumer
Amazon launches supply chain services to challenge UPS and FedEx
Amazon has launched a global supply chain service for businesses, directly challenging major logistics providers like UPS and FedEx with its internal infrastructure.
Amazon announced on Monday that it is opening its global logistics network to all businesses. The e-commerce company is launching a new service, called Amazon Supply Chain Services, which puts it in direct competition with established shipping companies UPS and FedEx. This new offering opens Amazon’s freight, distribution, fulfillment—the process of receiving, packaging, and shipping orders—and parcel shipping capabilities to businesses of all types and sizes. By offering these capabilities externally, Amazon is allowing other businesses to utilize the same global logistics network and infrastructure that the company has built and proven over decades.
The new service supports businesses operating in several sectors, including healthcare, automotive, manufacturing, and retail. Amazon announced that several companies have already signed up for the supply chain service. These early customers represent a variety of retail and manufacturing sectors, and include:
- Proctor & Gamble
- 3M
- Lands’ End
- American Eagle Outfitters
Peter Larsen, vice president of Amazon Supply Chain Services, compared the launch to Amazon’s previous infrastructure expansions. Larsen noted in a blog post that the company is bringing its established logistics foundation directly to external customers, drawing a parallel to how the company scaled its cloud computing division. “Amazon is bringing the infrastructure, intelligence, and scale of its supply chain services—proven over decades—to businesses everywhere, much like Amazon Web Services did for cloud computing,” Larsen said.
By opening these capabilities, Amazon is creating a new growth avenue within its e-commerce division. The company is turning a service long used by thousands of independent third-party sellers—independent businesses selling on Amazon’s marketplace—into a broader offering available to any business. By transforming this service into an external offering, Amazon is pivoting from an internal logistics operator to a third-party service provider, creating a new revenue stream from its existing logistics network.
Why it matters
Amazon is pivoting from an internal logistics operator to a third-party service provider, creating a new revenue stream that directly threatens the market share of established global shipping giants.