Most companies see their UPS and FedEx delivery operators every day and are based on first names. But as of last week, only one of these drivers will bring packages from Amazon. One way or another, it`s a valuable lesson of what happens when your biggest customer largely decides it`s cheaper to cut you and why it`s worth getting ready for the day you might have to make a decision like UPS and FedEx. That`s the problem – in the long run, Amazon will only be a growing threat to UPS. During her 18 years as Chief Financial Officer of Home Depot, the retailer has increased sales margins and profit margins in existing subsidiaries by using new technologies and wooing small entrepreneurs. Over its life, the retailer recorded an overall return on share prices and dividends of approximately 575%, more than double what UPS recorded during the same period. Home Depot`s return on invested capital last year was 39%, close to the top of the S-P 500 index, and the operating margin was 14%, which was exceptionally high among retailers. The decision should come as no surprise to Amazon, which has been building its own delivery infrastructure for years to reduce logistics costs and maintain greater control over how its products range from manufacturers to Amazon warehouses to customers` homes. The company oversees an extensive network of storage, air hub and cargo logistics, in addition to a growing network of flex personnel transport drivers who are used under a contract model similar to Uber. ”We understand that this is a change in their business and we have not taken this decision lightly,” Amazon said in a statement to shippers verified by the Wall Street Journal. ”We will be working with you in the coming weeks to ensure that your business is as undisturbed as possible.” ”UPS continues to cling to this proverbial tiger tail called Amazon.
They don`t want teeth,” Gooding said. UPS declined to comment on Amazon`s price and said it did not speak to individual customers. All this of course costs Amazon a fortune. The company said in October that in the three months from June to September, it spent an additional 50 percent on completion alone, due to both the one-day premium shipment and the overall expansion of its U.S. retail business. But for Amazon, it`s a rewarding effort if it means it can control the entire supply chain from start to finish. To a reasonable extent, this would save Amazon money and become even more efficient in supplying products. Although Tomé (the great toh-MAY) is the first CEO in its 112-year history to come from upS management, she has been a member of the board of directors since 2003, which makes her aware of the problem.