It's amazing how quickly things can change, even for giant corporations like Amazon. In just the past few weeks, the company has stopped (and then app
It’s amazing how quickly things can change, even for giant corporations like Amazon. In just the past few weeks, the company has stopped (and then apparently restarted) shipping products that aren’t considered priority or essential. It also announced it would hire 100,000 temporary workers to handle the surge in online shopping. Now, the company is shutting down its in-house delivery network–at least for now.
You may remember that Amazon has been working for a few years to build out its own delivery service to rival FedEx and UPS. The idea was that Amazon would have more control over its own operations and would save money by no longer requiring third-parties to deliver its packages to customers.
Of course, in order to save that money, it would first have to spend billions of dollars. In fact, some estimates said that Amazon would likely have to spend as much as $122 billion to build out its own independent shipping network. In the meantime, the company would subsidize that investment by allowing sellers to ship directly to customers using Amazon Shipping, in mostly the same way they would otherwise use a service like UPS.
Now, however, it turns out that idea makes less sense. As a result, Amazon sent a letter to customers, telling them:
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 pick-ups will be June 5th.
While Amazon isn’t completely clear on why it’s “pausing” the service (in its words), there are a few likely reasons. The most obvious possibility is that the whole thing was simply losing too much money.
Amazon’s shipping service charged prices that were, in some cases, half of what other shipping companies were charging. While Amazon has long been willing to play the long game when it comes to investing in projects, there comes a point when it’s simply not worth it.
There is also reporting that Amazon’s service was simply less reliable for sellers. Business Insider shared the experience of a third-party seller, who said that Amazon Shipping lost as much as a third of shipments in its first few months. While that performance has improved, the seller said he simply wasn’t confident enough to use the service more broadly.
There’s also a lesson here that not even the biggest of big guys are immune to the dramatic changes that have impacted our daily lives, our economy, and the way we do simple things like shop. Companies large and small are having to make hard choices about where to focus their business, for both the short and long term.
Sometimes those choices mean letting go of something that simply isn’t working. That thing might be a great idea, but when the success of an idea is governed by circumstances beyond your control, it can quickly become a liability. When that happens, your job is to do the right thing for your customers, your team, and your community.
This article is from Inc.com