The US eCommerce giant is temporarily suspending its in-house delivery network known as Amazon Shipping says a new report. The news comes a few days after a report claimed that Amazon Prime Day might happen in Aug. 2020. Amazon also announced earlier that it would hire 100,000 temporary workers to handle the increase in the demand in online shopping.
Amazon Shipping is the in-house delivery service that the eCommerce company introduced a couple of years ago. This particular service does not store products on its warehouse but delivers packages to buyers from third-party businesses that sell their products on the official site of Amazon. The service is a direct rival of the delivery service offered by UPS and FedEx.
A few years back, Amazon was working to create its own delivery service like that of FedEx. It would give the eCommerce giant far more control of its operations. Additionally, it would help Amazon cut costs since it would no longer tap to third-party businesses to deliver products to buyers. Some analysts estimate that the eCommerce giant spent around $122 billion just to build its own shipping network.
With a massive investment on the Amazon Shipping, it is surprising that the company is momentarily putting the service on hold. In a letter sent to customers, the eCommerce giant says that "At Amazon, we regularly evaluate the requirements of our businesses to ensure we are structured in the best way possible to meet the evolving needs of our customers. After careful consideration, we have decided to pause our Amazon Shipping service in the US Our last day for pickups will be June 5."
It is not clear why Amazon Service would be put on hold. Amazon obviously has its own valid grounds for pushing the move. However, according to INC, one of the most likely reasons is that Amazon Service is losing too much money. It is also possible that the company intends to direct its resources to accommodate the influx of its current orders.
Business Insider recently revealed in a report that Amazon Service was less reliable for sellers. The report shared some details on the experience of a third-party seller who claimed that Amazon Service lost around one-third shipments for its first few months. Although the service has dramatically improved, the seller, according to the report, is no longer confident to use the service.
It is worth noting that Amazon Service is not yet widely available in the US. As to this, temporarily suspending the service would not significantly affect its orders. In another perspective, it is the company's way of prioritizing the delivery of essential products.
