The Amazon Plan to invest more than $ 4 billion by the end of 2026 to expand its rural package delivery network and allow faster delivery to small cities in the United States is a preventive movement against Walmart, according to a main panel analyst.
“ They are doing this in response to Walmart. Walmart is up to date with them (in e -commerce) and building their own network of delivery controllers who use the Uber and Lyft concept of independent concert drivers, ” which use an application to accept packages, said Satis Jindel, founder and president of Shipmatrix, package management, consultation and an analytical company, in a telephone interview.
Amazon and Walmart in recent years have become important rivals for FEDEX, UPS and the United States Postal Service in the package shipping sector. Amazon, Walmart and other retailers will capture most of the growth in the national package market, According to a recent Shipmatrix report.
Walmart’s ability to meet the orders of his stores and clubs has been a key engine of e -commerce growth, said CEO Doug McMillon during an investor city council last month. The coverage of the Retail of American Homes with a delivery of the same day has grown by 22% for the past two years. The company can now provide delivery on the same day to 93% of US residences, up to 76% of homes two years ago, he said.
“Walmart is not as predominant in rural areas. Amazon wants to say that Walmart does not reach it otherwise. In rural areas, Walmart may be willing to pay people $ 15 per hour instead of $ 10. Barals than UPS, FEDEX or even the post office.”
The retailer also has the advantage of participating only in the business market for consumers, which means that their network is one -way, as they do not need to be collected.
Amazon announced the expansion of rural delivery last week. Capital expenses will pay for more than 200 delivery stations, triple the size of the rural delivery network and reduce the delivery times to half for the main members in less populated areas, said Udit Moren, Senior Vice President of Amazon Worldwide Operations, in a blog post.
Locating more distribution centers near customers, Amazon will be able to deliver more than a billion additional packages each year to customers in the remote areas of the country. With the updates, the last Amazon Mile Delivery Network will cover additional 1.2 million square kilometers, equivalent to the area of Alaska, California and Texas, combined.
“At a time when many logistics suppliers are supported by serving rural customers due to the cost of serving, we are increasing our investment to facilitate their lives,” Moren wrote.
Amazon opened its first rural delivery station in 2020 and began to increase the delivery network of small cities by 2023, as the company changed to a regional and local distribution model. Maden said the effort has already improved the delivery speed 50% on average.
Other large packet carriers are cutting off the rural service. By 2023, SAI initiated a deferred delivery program that combines shipping in some rural areas to maintain low prices and improve efficiency because the cost of service provision is higher than densely populated. The company said at the time that the shipments of certain postal codes will spend an additional day in transit, but that less than 1% of the shipments have an impact.
Fedex Rival reduced home delivery at home in some outlying areas by 2022 and the United States Postal Service on April 1 began to reduce The number of trucks and e -mail collections in most postal facilities beyond 50 kilometers of a processing plant to eliminate inefficient truck races, adding one day to time of delivery for the mail from the remote post offices and postal codes.
“The expansion allows Amazon to deliver a day delivery at a very low cost, which would be very difficult for UPS/FedEx to compete, using existing networks,” said Morgan Stanley’s transport analyst, Ravi Shanker, in a client note.
In addition to increasing the expansion obstacles for the Walmart delivery network, Amazon has more opportunities to control the rural delivery market after being launched, its cheaper shipping product, through the postal service prices for the last mile delivery and because the postal service changes could soon increase the delivery prices of the rural areas, Jindel said to Freightwaves.
Amazon said that the rural delivery expansion will create more than 100,000 part -time jobs and drivers’ opportunities.
Amazon uses a combination of third -party delivery providers. The Delivery Service Members has created more than 4,000 owners with small van fleets to deliver packages in defined territories. A relatively small number of drivers deliver with their own vehicles within the framework of the Amazon Flex program. And small businesses can sign up for deliveries to their communities within the framework of the center’s delivery program.
Amazon could expand the use of concert controllers under flex to support more rural delivery, said Jindel.
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