Amazon.com, Inc. is poised to take on UPS and FedEx soon with a new global shipping business. It is no secret that Amazon has been looking to expand its global shipping and logistics operations, but leaked documents obtained by Bloomberg’s Spencer Soper show its plans are a lot bigger than most observers thought.
A project known internally as Dragon Boat has plans to launch a new rival to UPS and FedEx known as Global Supply Chain by Amazon. The firm is hoping to control the delivery process from start to finish, bringing products straight from from the factory to customers’ hands.
Under the system, sellers would book directly with Amazon rather than traditional shippers such as UPS, FedEx, or DHL. The document says that the firm would partner with third-party carriers as it builds its global enterprise and then slowly overtake them once it learns the ropes and volumes grow.
Not only will this bold plan pit Amazon against UPS and FedEx; it will also place them in direct competition against their Chinese counterpart Alibaba.
According to the document, Dragon Boat is a “revolutionary system that will automate the entire international supply chain and eliminate much of the legacy waste associated with document handling and freight booking.”
Move could cut costs, expand product offerings
Amazon spends a lot of money on fulfillment and logistics, and such a move could help the firm cut these costs quite a bit.
Amazon has claimed that its interest in running cargo ships and leasing planes was merely a way to deal with the extra demand noted during holiday periods. However, these documents indicate that the firm intends to make shipping one of its core businesses as early as this year.
The move could help bridge the gap between merchants in places like China and India and online shoppers in Europe and the U.S. The document explains how Dragon Boat would open cross-border commerce up to smaller sellers who normally would not have access to it. The merchants could summon Amazon trucks to their warehouses using an app, and the goods would then be carried on Amazons ships to the customers.
Amazon.com, Inc. gets shipping licenses
There are plenty of signs that the plan is going forward. Amazon has already gotten a license to serve as an ocean container shipping wholesaler from the U.S. Federal Maritime Commission. Now it has been revealed that Amazon also got a similar license from the Chinese Ministry of Commerce. This means it can now buy shipping container space for wholesale rates and resell it for retail prices.
Around 40 percent of the firm’s current revenue comes from small businesses that buy products from China and then sell them to American customers via Fulfillment by Amazon.
USA Today reports that Amazon listed itself as a transportation service provider for the first time in its most recent 10-K annual report.