Amazon.com Inc will suspend a delivery service in the United States which aims to compete with FedEx and UPS. According to the Wall Street Journal, which was first to announce the move, the retail giant told clients that Amazon Delivery would be suspended starting June.
The company is stopping the service because, based on Journal reports, it needs staff and resources to tackle an increase in orders from its own clients.
Amazon Shipping, as a separate division, includes drivers picking up products from establishments and delivering them straight to customers. The service is available in several major metropolises, including Los Angeles, and is directly competing with the two other cargo behemoths.
Amazon's move to suspend its third-party delivery service is seen to give its competitors some edge. FedEx ended its contract with Amazon in 2019 after viewing the company as a threat because of its growing shipping influence.
Today, Amazon still depends on UPS, in addition to employing its own drivers, to handle a large part of its home deliveries.
While Amazon is likely to lose to United Parcel Services and FedEx on competitive grounds to some degree on the basis of its latest move, it will be able to meet the increasing consumer demand on time.
Amazon Shipping restriction reflects the deep commitment of the e-commerce giant to customer satisfaction, which continues to be the primary driver behind its business success and dominant role in the online retail industry.
In addition, its customer-oriented programs have instilled trust in the stock from investors. In terms of price performance, Amazon has returned 9.7 percent over a year against the market's retreat of 0.1 percent.
The break comes in the midst of an unprecedented rise in sales for Amazon and more generally online shopping, as consumers are advised to stay home and shops remain shuttered due to coronavirus.
Amazon revealed in March that it would employ 100,000 new delivery personnel to keep up with demand. The company also warned consumers that they could see longer than average delivery time because of the high amount of orders.
Amazon has been having difficulties delivering several products to customers in one day or two, as the company guaranteed before the outbreak. Amazon Shipping's suspension would allow the company to concentrate on its core distribution activity, said Shipware founder Trevor Outman.
Amazon has partnered with ride-hailing company, Lyft. Based on the deal, Lyft has asked its fleet of drivers to consider job opportunities at Amazon as means of extra income. These comprise delivery drivers, warehouse and shopper jobs.