Amazon Lures Shippers With Promise Of Lower Delivery Fees

Amazon, which is expanding its in-house delivery network dubbed Amazon Shipping, is wooing customers by offering fees lower than those charged by traditional carriers such as FedEx and United Parcel Service (UPS).

According to a report in The Wall Street Journal, citing an email sent to shippers in the New York area last week and reviewed by the paper, Amazon is promising to reduce charges such as fees to deliver during the holiday season and on weekends. Those charges can add up – the residential surcharge at FedEx and UPS accounts for more than 40 percent of the ground delivery charge, noted the report. The two carriers also have fuel surcharges, which fluctuate with the going rate in the marketplace. Overall fees can account for 30 percent of shipping costs in many instances.

An Amazon spokesperson told the paper that the eCommerce giant is “always working to develop new, innovative ways to support the small and medium businesses who sell on Amazon, including testing shipping programs that help these businesses get packages to their customers quickly and reliably.” In the email to shippers, Amazon also said it offers rates that aren’t as complex as the pricing structures of UPS and FedEx. What’s more, delivery snafus won’t count against seller ratings.

A UPS spokesman declined to comment on Amazon’s strategy, but noted to The WSJ that “UPS has a healthy and growing small-package business … capable of transferring goods competitively from dock to doorstep anywhere in the world.” Meanwhile, a FedEx spokeswoman also declined to comment on Amazon’s strategy, but expressed confidence in its position and its future.

Last year, Amazon launched its own delivery network, aiming to control the last mile to consumers’ doorsteps. In November, the eCommerce company stepped up its ambitions, offering steep discounts on rates compared to FedEx and UPS. In an interview with CNBC at the time, Ray Berman, an Amazon seller, said the rates are “as much as 50 percent cheaper than what UPS charges.”