Small-parcel shipping is an industry I learned about as a founder. We spent over a million dollars on shipping in some years, which forced me to learn the industry. I saw a duopoly firsthand and navigated its impacts on our operations. I’ve continued to keep tabs on this space. A few years ago, I predicted that Amazon’s shipping service would be bigger than FedEx and UPS. I didn’t know when it would happen, but I was sure it would, given the trajectory at the time and the need for a more innovative player in the space.
Today, the Wall Street Journal reported that Amazon’s parcel volumes surpassed those of FedEx and UPS for the first time. This year, through Thanksgiving, Amazon has delivered over 4.8 billion packages, a figure that’s projected to reach roughly 5.9 billion by year-end. Through the first nine months of this year, UPS has processed 3.4 billion parcels. FedEx processed right at 3 billion parcels in the fiscal year ending May 31, 2023. Amazon started this service less than a decade ago and is now a formidable competitor (and one of UPS’s largest customers).
I saw this coming years ago when I was a founder, but FedEx and UPS were less worried because they thought it inconceivable that Amazon could create a competing logistics network in less than a few decades. FedEx’s CEO and chairman, in 2016, even called the idea of Amazon competing “fantastical.”
Amazon’s ability to become a leader in a space dominated by a duopoly for decades is a clear example of why companies shouldn’t get complacent. They should keep innovating and take growing competitors seriously, even if they’re small now.
The small-parcel industry hasn’t kept up with changing consumer needs. I think Amazon becoming a formidable player in this space will ultimately lead to more innovation and a better consumer experience. I can’t wait to see how the industry evolves in the coming years.