UPS and Amazon at Odds During Major Retail Season
A shipping conundrum over greed and profit can help small retailers.
It’s rare to see a company thriving during a time when unemployment is on the rise and millions are unemployed, but buying from home has left Amazon in the driver’s seat when it comes to earning revenue. The Verge says Amazon doubled its net profit year over year to $5.2 billion, compared to $2.6 billion in the last quarter of 2019. And that’s after spending $4 billion on what Bezos describes as “incremental COVID-19 related costs in the quarter to help keep employees safe and deliver products to customers.”
The company that could be looking at more than double its money in profits may be getting greedy. It wouldn’t be a little bit shocking if UPS wanted a more significant piece of Amazon’s revenue, either. It’s a delicate line to walk since Amazon already discontinued its shipping services with Fed-Ex in 2019.
The Verge reports:
Amazon still uses UPS, but it’s also been building out a network of its own delivery drivers under the Amazon Flex platform, which is a kind of on-demand contract network similar to Uber and food delivery companies like DoorDash.
In the third quarter of 2020, UPS is still providing shipping services to Amazon, but is limiting the capacity of major retailers in order to facilitate the e-commerce giant. Is UPS getting greedy too? During a time when customers are ordering everything from toilet paper, peanut butter, and light bulbs they would ordinarily purchase at the grocery store online, Amazon is becoming the online shopping for all your household needs network. Amazon dominates the e-commerce market by singlehandedly being responsible for 38% of online shoppers, Time says.
Additionally, The Hill says:
“The latest industry estimates showed Cyber Monday to be the biggest online shopping day in U.S. history, with up to $11.4 billion in sales. Amazon announced Tuesday that independent businesses on its platform received more than $4.8 billion in sales worldwide from Black Friday to Cyber Monday.”
And large retailers like Gap, Nike, L.L. Bean, Hot Topic, and Newegg, whose doors are closed or are newly reopening, are feeling the pinch of limitations on shipping space.
“No exceptions,” the message reportedly said, to extra volume pick-ups. This position isn’t entirely new. Businesses have been aware of their shipping space requirements through UPS and are being held to the guidelines. There’s only so much space to go around during unprecedented times.
While retailers are accustomed to shipping space restrictions, what they aren’t used to is extra fees in the form of surcharges due to shipping space being at a premium. It comes down to survival and greed. Large retailers are looking to revive some of their lost profits in the third quarter when Amazon continues to thrive. Certainly, UPS could be getting a little greedy in wanting a slice of Amazon’s earnings for the shipping services it provides. But Amazon CEO Jeff Bezos may also be greedy in wanting to keep more of the profits for himself. Amazon, which was already shipping at least half of its own packages, is expanding its shipping services.
Amazon, which seems to be raking in the cash, is also spending billions by expanding food delivery and robotic surge delivery. Drone delivery has been tested and soared during the unprecedented shop from home era. Even through expansion, Amazon holds around a 40% profit margin. Amazon’s goal seems to be making it easy for customers to buy everything they need, including food, and getting items to customers’ doors quickly.
What this means for you and your packages
Amazon is committed to delivering what you ordered quickly. As large companies seem to be battling for position and profits, you have an opportunity to reconsider where you shop. Likely the large companies will live to see another day, but what about the local mom and pop stores that have already closed permanently or need every penny they make in order to survive? If you are comfortable shopping in person, this is an excellent time to visit local retailers who may have to shut their doors without you shopping with them for your last minute needs.
Need a gift with a special touch before the end of the year? Take comfort in shopping with small, local retailers who need every penny, dime, and dollar you spend. You’ll likely encounter a small number of people for a quaint shopping experience and find a unique item you may not find anywhere else. Shop small and local to help small businesses survive. It’s possible you’ll find a rare treasure you can hand-select to fulfill your gift-giving needs.
