Disclaimer: We have two UPS Store franchise stores and run 100+ accounts on Amazon as part of the agency Commerce Canal.
One of the more interesting relationships in eCommerce is UPS and Amazon. UPS recognizes Amazon’s dominance of >40% of eCommerce share. Amazon recognizes UPS’ willingness to deliver to addresses that Amazon has yet to have the scale to profitably deliver to. Amazon also realizes that the more than 5,500 UPS Stores (which operate independently from UPS) are perfect for return drop-offs. However, Amazon clearly has the upper hand. Amazon already delivers more packages and accounts for nearly 12% of UPS’ annual revenue.
Amaozn has yet to open dropoff stores that also provide shipping services but it seems that Amazon is now coming after return pickups.
““We’ve been conducting a limited pilot in recent months of having Amazon pick up heavy/bulky returns and other items to provide more return choices for customers,” Amazon spokesperson Branden Baribeau said in a statement. Asked what the pickup test means for Amazon’s relationship with UPS, Baribeau said: “We’re always testing new features like this to provide more choices for our customers. UPS remains a valued business partner.” Baribeau added that customers in the test markets will be able to choose between UPS and Amazon to pick up their returns.”
While this sounds as an offensive move on Amazon’s part, customer return pickups are somewhat infrequent due to the cost of $7.99 per pickup. A pickup does make sense for larger items but the vast majority of returns come via dropoffs to Amazon Lockers, UPS Stores, Staples, Kohls or customers printing labels from home and shipping back directly to Amazon. Now if Amazon were to make those return pickups complementary as part of the customer deliveries, this would become a worry for UPS. However, the logistics make that quite difficult. As the returns are picked up from customers, they would need to be tagged and/or consolidated en route back to Amazon.
Bottom line: I just can’t see how this is a major impact to UPS at this time. If Amazon were to waive the $7.99 fee…it would be another story. I still however marvel at the size of Amazon Logistics in sheer volume which will soon surpass the USPS.