When you place an order on an e-commerce platform, have you ever wondered who ultimately delivers your package? Amazon, the retail giant, is making significant adjustments to its logistics approach. According to reports, the company plans to discontinue its third-party delivery service for non-Amazon packages by June, redirecting resources to handle the surge in its own business during the pandemic.
This strategic pivot reflects Amazon's need to concentrate manpower and delivery capacity on its core operations. To ensure timely delivery of essential goods, the company announced plans to hire 100,000 additional warehouse workers. The third-party delivery service, initially launched in February 2018, was designed to compete with established carriers like UPS and FedEx. The concept involved Amazon collecting packages from merchants and delivering them directly to consumers, beginning with a pilot program in Los Angeles before expanding to other cities.
However, logistics experts note that the service never posed a serious threat to incumbent carriers. "Amazon has been struggling to keep pace with its own growth," observed Jerry Hempstead, president of Hempstead Consulting. "While it could eventually become a competitor to UPS and FedEx, the pandemic has altered consumer behavior, requiring Amazon to scale up significantly before challenging these giants."
The challenges are substantial. Building sufficient scale to compete requires overcoming operational hurdles including vehicle procurement, driver recruitment during high unemployment, and constructing additional delivery facilities—each distribution terminal typically supports about 200 delivery routes.
Looking beyond the pandemic, Hempstead predicts lasting changes in shopping habits. "One consequence of this crisis is that it will permanently alter post-pandemic purchasing behavior," he said. "Amazon's business won't experience a major downturn. I believe the company is simply acknowledging this reality."
Analysts characterize the discontinued service as a limited pilot program that never evolved into a full-fledged third-party operation. "As part of Amazon's shipping services, the company could choose between its own logistics network or external providers like USPS, UPS, and FedEx," wrote Morgan Stanley transportation analyst Ravi Shanker. "For affected customers, the impact on traditional carriers may be minimal since Amazon might have already been using them for last-mile delivery anyway."
The move highlights broader challenges facing global logistics networks. "Recent service delays and congestion demonstrate how supply chains must adapt to rapidly changing demand patterns caused by the coronavirus," noted Ben Hartford of Robert W. Baird & Co. The development also underscores the fundamental role of established carriers during periods of high demand and service imbalances.
For shippers, Amazon's withdrawal from third-party deliveries—combined with its current operational challenges in fulfilling its own orders—creates new logistical considerations. Businesses may need to reevaluate their distribution strategies and identify alternative reliable partners.
Ultimately, Amazon's decision represents a strategic reallocation of resources during extraordinary circumstances. While some merchants may face temporary disruptions, the move allows Amazon to strengthen service for its core customers and reinforce its e-commerce leadership. Whether the company revisits third-party delivery in the future remains an open question worthy of ongoing observation.