Amazon.com is building a new private fleet to support the expansion of its online grocery delivery business, AmazonFresh, according to trade publication DC Velocity. According to the report, the company plans to expand its grocery delivery business to 30-40 US markets in 2014, and the private fleet would deliver both groceries and other merchandise for Amazon.
AmazonFresh, which has been in operation for five years, is still only currently available in Seattle, San Francisco, and Los Angeles.
However, James Tompkins, who runs Raleigh-based Tompkins International, has said that Amazon has plans to expand its grocery delivery business to 30-40 US markets in 2014, according to DC Velocity.
Tompkins said Amazon plans for the top 40 markets, which make up roughly half of the US population, to be served by the private fleet, while the remaining markets will receive non-grocery Amazon deliveries from parcel delivery carriers like FedEx and the US Postal Service.
This would be a great cost-saving strategy for Amazon. In 2012, the company paid $5.1 billion in shipping costs, as a part of its non-grocery e-commerce business. Shipping costs were nearly $3 billion more than shipping revenue, because Amazon Prime members, who pay an annual $79 fee, receive free 2-day shipping on most purchases.
If Amazon expands into all of these new markets, will they find the same success as in their three pilot cities? If the FAA approves the commercial use of drones for deliveries, would this mean Amazon's private trucking fleet was a wasted investment? It will be interesting to see how this proposed expansion plays out.
AmazonFresh
