Amazon Takes On FedEx, UPS With 50 Pct Price Cut On Delivery

In an effort to get more sellers to use the shipping service it launched earlier in 2018, eCommerce giant Amazon is offering steep discounts.

According to a report in CNBC citing Amazon seller Ray Berman, Amazon is offering steep discounts on rates compared to FedEx and UPS in an effort to lure more business its way. Berman, who was invited into a new shipping program by Amazon, told CNBC the rates are as much as 50 percent lower than what UPS charges. For example, a shipment of 600 pounds of boxes from his warehouse to Amazon’s fulfillment center costs him $80 with Amazon, $160 with UPS and $104 at FedEx. “I was amazed by it,” Berman told CNBC. “It could be a real saving in overall cash flow.”

The fact that Amazon is willing to offer such a competitive rate underscores just how serious it is about developing a shipping service that can take on the leaders. Amazon hasn’t talked up its shipping aspirations, claiming to only want to supplement its current partners, but the deep discounts on rates indicate how it may be heading. After all, Amazon is known for entering markets, slashing prices and ultimately dominating them. For the eCommerce giant, owning the last mile of delivery also gives it better control and ensures its merchants meet their shipping promises.

The new program is dubbed Amazon Shipping and currently only handles small package shipments that come from merchants to Amazon’s warehouse in the Los Angeles area. It doesn’t include delivery to consumers’ homes, noted CNBC. The invitation to the program calls the rates promotional, which means they could increase. The paper noted it could be possible that the discounts stay depending on how much and the size of the shipments.  “When you ship with Amazon, you get low rates and quick pickup and delivery to our facilities,” Amazon wrote in the invitation, according to CNBC. A spokesperson subsequently told CNBC that the company is always experimenting and innovating on behalf of the small businesses that sell on its platform.  In an email statement, the spokesperson said the test is focused on L.A. and is aimed at helping sellers speed up shipments to Amazon warehouses.