Does UPS Deliver Amazon Packages in 2023? A Seller‘s Guide to Understanding Amazon‘s Delivery Network and Leveraging Fulfillment Options

The short answer is yes, UPS does deliver a small portion of Amazon‘s packages even in 2023. However, Amazon moves the vast majority of orders through its own massive and expanding fulfillment operation.

In this detailed guide, we‘ll unpack everything an e-commerce seller needs to know about shipping with Amazon:

• How Amazon leverages UPS, FedEx and USPS for deliveries
• The scale and capabilities of Amazon‘s in-house logistics
• How many packages Amazon delivers globally
• Pros/cons of Fulfillment by Amazon (FBA) vs. self shipping
• Amazon‘s rapidly growing transportation empire
• The Amazon Flex program for everyday delivery drivers
• Pay, benefits and job outlook for Amazon drivers
• Strategic advantages Amazon gains from its logistics focus

By the end of this guide, you‘ll understand the ins and outs of Amazon shipping. Let‘s get started!

Does UPS Handle a Significant Share of Amazon Deliveries?

The short answer is no. UPS delivers an estimated 4-5% of Amazon‘s packages in the U.S. as of 2022, according to supply chain analysts.

FedEx handles a similarly small sliver of Amazon volume. The U.S. Postal Service delivers more Amazon parcels than FedEx or UPS but is still dwarfed by Amazon‘s internal operations.

Here‘s a breakdown of which carriers deliver Amazon packages and their estimated distribution based on available data:

So while UPS does deliver some Amazon parcels, it is far from being a primary provider. Amazon only leverages partners like UPS to supplement its own fulfillment, typically in areas that Amazon‘s network has not built out yet.

For you as a seller, this means UPS should likely be a secondary shipping partner rather than your main carrier. We‘ll get into fulfillment strategies later in this guide.

First, let‘s examine why Amazon moves so many packages in-house…

Why Does Amazon Handle Most of Its Own Deliveries?

There are several strategic reasons why Amazon has rapidly scaled up its logistics operations:

Cost Savings – Shipping millions of packages in-house allows Amazon to secure volume discounts and optimize routes for efficiency. Amazon reported a record $88 billion in fulfillment costs in 2021, so every bit of savings matters in their thin-margin e-commerce business.

Speed – With fulfillment centers placed close to population hubs and a massive fleet of vans, trucks, planes and drivers, Amazon can achieve faster delivery speeds than any other retailer. This allows Amazon to offer Prime members free 1-day shipping on over 10 million products.

Capacity – Doing fulfillment in-house means Amazon is not capacity constrained like UPS and FedEx networks. During peak seasons like the holidays, Amazon can expand fleets and staffing to handle spikes in volume. No reliance on third-parties.

Control – Amazon wants to control the entire customer experience from product selection to doorstep delivery. By handling logistics in-house, Amazon can monitor performance and make quick improvements as needed.

Differentiation – Leveraging its supply chain provides Amazon with a sustainable competitive advantage over rivals. Walmart, eBay and other retailers simply cannot match Amazon‘s shipping prices, speeds and reliability.

Revenue – Growing its logistics footprint opens up a new profit center for Amazon. The company is expanding ‘Amazon Shipping‘ services it offers to third-party merchants at competitive rates compared to UPS/FedEx.

Bottom line: Delivering its own packages allows Amazon to offer Prime members free, fast shipping that no other retailer can rival. It‘s a key advantage Amazon will continue to invest in.

Now let‘s examine the scale of Amazon‘s delivery operations…

How Many Packages Does Amazon Deliver Per Year?

In 2021, Amazon delivered an estimated 7.7 billion packages globally, according to IHS Markit. The vast majority – around 6 billion – were in North America between the U.S. and Canada.

To handle this massive volume, Amazon utilizes:

• Over 200,000 delivery vans and trucks
• 85 airline cargo planes + leased aircraft
• Over 1,000 Amazon-branded delivery stations
• 600,000+ employees in fulfillment and logistics

For perspective, here is how Amazon‘s 2021 North American package volume compares to other major carriers:

As you can see, Amazon delivered more packages in North America than FedEx and UPS combined. And Amazon‘s volume is growing at an astonishing rate of around 15-20% per year.

At this pace, within 2-3 years Amazon could surpass UPS and FedEx in worldwide delivery volume too. The company is investing over $90 billion just in transportation capacity expansions to make that possible.

This tremendous growth underscores how vital Amazon‘s logistics empire is to its success. It also shows that UPS plays a minimal role in last-mile delivery for Amazon itself.

So what does all of this mean for you as a seller on the Amazon marketplace? Let‘s discuss that next…

As An Amazon Seller, What Are My Fulfillment Options?

Sellers have tremendous flexibility in how they fulfill Amazon orders:

Fulfillment By Amazon (FBA) – You ship your inventory to Amazon‘s warehouses and they pick, pack and ship your orders for you. Products get Prime logo and free 2-day shipping. Easy but more expensive than self shipping.

Self Shipping – You handle the logistics of order fulfillment yourself from your own warehouse. Flexible and cheap but more complex.

Amazon Shipping – Hybrid of FBA where Amazon stores and ships your goods, but you do product packaging. Cost friendly option with fast shipping enabled.

Third-Party Prep Centers – Outsource prep and shipping to an intermediary company so you don‘t have to do it in-house. Adds fulfillment labor flexibility.

Most sellers utilize a combination of these fulfillment methods strategically. According to Jungle Scout data, over 55% of sellers leverage FBA for at least a portion of their inventory.

Why is FBA so popular? It makes the fulfillment process simpler for merchants while all but guaranteeing Prime-qualifying fast shipping. Consumers overwhelmingly prefer Prime items, so FBA provides a major competitive boost.

However, FBA comes at a cost with Amazon charging storage fees, order handling charges, and monthly subscription costs. For high volume sellers, these expenses can exceed over 20% of the product price.

That‘s why many large sellers use FBA for faster selling SKUs and self ship slower inventory. This hybrid approach gives you the best of both worlds.

When self fulfilling orders, you have full control over which carriers you use for shipping. While USPS offers the most affordable ground delivery rates, UPS and FedEx provide faster service levels.

As we‘ve discussed, UPS handles a small fraction of overall Amazon volume. But for your own e-commerce shipments as a merchant, UPS is likely a better option than for Amazon‘s first party sales.

Here are some benefits of UPS that make it an attractive self fulfillment partner:

• Very competitive transit times with ground averaging 1-5 days.
• Offers discounted volume rates for high volume shippers.
• Has extensive infrastructure with hubs in every population center.
• Provides great tracking visibility and customer service.
• Ideal for larger and heavier items compared to USPS.

The downside of UPS is a bit higher base pricing than USPS for low weight ground parcels. But UPS Ground can still be 30-40% cheaper than Prime shipping fees.

For expedited shipments, UPS Next Day Air offers guaranteed overnight delivery at excellent rates compared to FedEx Priority Overnight.

So UPS brings unique advantages to the table. Evaluate your average order weight and transit time needs. For many sellers, a UPS/USPS mix is optimal for self fulfillment.

Amazon Is Rapidly Expanding Its Delivery Network

We‘ve established how Amazon handles the lion‘s share of its own shipping. Now let‘s discuss how Amazon is aggressively expanding its logistics empire to accommodate explosive order growth.

In 2022 alone, Amazon has:

• Leased 12 new Boeing cargo planes expanding their fleet to 90 aircraft.
• Ordered 100,000 electric delivery vans from Rivian to transition their fleet to EVs.
• Opened over 100 new fulfillment centers, sortation sites and delivery stations.
• Hired 150,000 employees just within their logistics division, not including warehouse workers.

Analysts estimate Amazon has spent over $100 billion building out their warehousing and transportation capacity globally.

Some other interesting facts about Amazon‘s quickly growing logistics footprint:

• They have nearly 1,000 delivery stations for final-mile reach – more than UPS and FedEx combined.

• Their fleet handles the first and last mile delivery for an estimated 60% of packages – partners like USPS take packages between hubs.

• Amazon‘s air network has capacity to deliver 2.5+ million packages daily – making them a top 10 cargo airline.

• 72% of Americans live within 10 miles of an Amazon Logistics facility.

So despite already being an enormous delivery provider, Amazon is still rapidly expanding. This huge investment lets Amazon extend fast Prime shipping to more members.

More recently, Amazon has been growing its Amazon Shipping business. This new service lets other ecommerce sellers take advantage of Amazon‘s logistics network for a fee.

It provides easy access to Amazon‘s scale and capacity without the full expense of FBA. So you get affordable Leveraging Amazon Shipping can help merchants offer fast Prime-like shipping.

This new service shows Amazon plans to become a full-scale third-party logistics provider on top of serving its own e-commerce needs. That Amazon Shipping now competes directly with traditional carriers underscores the major investments they are making in fulfillment and transportation.

Flex Delivery Program Lets Anyone Be an Amazon Courier

Amazon Flex is a really fascinating program that opens up last-mile package delivery to everyday people, not just professional drivers.

With Flex, you simply download an app, go through a quick screening process, and start claiming delivery "blocks" during times you are available. Using your own vehicle, you then pick up packages from Amazon and make the deliveries within your block.

It‘s similar to Uber but for e-commerce order fulfillment. And it pays pretty well too, with Flex drivers earning $18-25 per hour on average, depending on location and demand. You cover your own vehicle costs and gas.

Amazon utilizes Flex to provide added capacity during busy periods like holidays. It also improves efficiency in remote and rural areas that lack dense stops for its regular fleet routes.

Flex also lets Amazon onboard delivery providers much quicker than buying additional vans and hiring employees. Within days, new Flex drivers are making deliveries. That scalability is invaluable.

During major surges, Amazon has expanded the Flex program from 50 cities to over 2,000 cities within a matter of months. This shows the power of crowdsourcing delivery labor from everyday people.

So if you ever see a random everyday car pull up with an Amazon package, chances are its a Flex driver making some extra cash by joining Amazon‘s crowdsourced delivery army.

Next let‘s compare Amazon‘s regular driver roles…

How Do Amazon Delivery Jobs Compare to Flex?

As we‘ve seen, Flex offers flexible part-time work delivering Amazon packages in your own car. How does this compare to being a full-time delivery driver?

Here is a breakdown:

Full-Time Driver

• Paid hourly, typically around $16/hr but up to $20/hr
• Use a company cargo van provided by Amazon
• Make 100-150 stops per 8-10 hr shift
• Eligible for overtime pay
• Given a consistent route and area
• Health, dental, 401K benefits
• More oversight and performance management

Flex Driver

• Paid per block, earn $18-25/hr on average
• Use any 4-door vehicle you own
• Choose when and where to deliver
• No benefits or overtime pay
• Make 50-100 stops per 4 hr block
• More flexibility but less stability

The major trade-off is Flex offers freedom to be your own boss, while employees get guaranteed income and better perks.

For regular drivers, Amazon offers solid compensation and benefits relative to other delivery services like UPS. Hourly pay starts around $15 but rises quickly to ~$18 after just 6 months.

With overtime, experienced drivers can earn over $40,000 annually in many regions. Plus you get stocks and retirement benefits exceeding most transportation work.

Advancement opportunities are abundant within Amazon‘s rapidly growing logistics organization for full-time employees. Ambitious drivers can move into management roles overseeing hubs and leading teams. This lets employees quickly gain experience to advance their careers.

The combination of good pay, ample benefits and promotion potential explains why Amazon attracts so many candidates to delivery roles.

For Flex drivers, the appeal is schedule flexibility and low commitment. But it comes without healthcare or retirement benefits. So pros and cons exist for both delivery worker types.

Key Takeaways and Advice for Ecommerce Sellers

Let‘s recap the key points that differentiate Amazon‘s logistics capabilities from partners like UPS:

• Massive Scale – Amazon ships 50-60% of its own enormous package volume in-house.

• Speed – Their fulfillment infrastructure and network design enables 1-day Prime delivery speeds.

• Expansion – Rapidly growing air/ground fleet, warehouses and staff. Investing $90B+ in transportation.

• Crowdsourced Drivers – Flex program provides unique scalability to handle demand spikes.

• End-to-End Control – Owning the entire supply chain improves efficiency, costs and service levels.

What does this mean for you as an ecommerce seller? Here are my top tips:

• For FBA, embrace 1-day Prime shipping to maximize sales velocity, even if fees are higher. Fast shipping drives conversion.

• For self shipping, offer customers 2-day transit times if you want to compete with Prime deliveries.

• Evaluate Amazon Shipping for affordable 2-day shipping without the full FBA cost. Provides speed at a fair price.

• Use USPS for light, small packages and UPS Ground for heavier shipments. Avoid FedEx SmartPost.

• Negotiate with UPS for steeper discounts based on your order volumes. Their published rates are just a starting point.

• Consider Flex as a supplemental workforce for seasonal or overflow order volumes. On-demand and low commitment.

Amazon has fundamentally raised consumer delivery expectations. To stay competitive in ecommerce, your fulfillment strategy needs to match or even exceed the convenience that Prime offers customers.

UPS plays only a minor role in fulfilling Amazon‘s own massive order volume. However, leveraging UPS, USPS and optimizing your use of FBA are key to cost-effectively achieving Prime-like speeds.

The Future of Amazon Shipping

Amazon shows no signs of slowing its fulfillment and transportation expansion. Within 5 years, analysts predict Amazon will surpass both UPS and FedEx in packages delivered globally.

This tremendous growth comes with risks, as Amazon takes on more delivery costs and operating complexities. Their logistics strategy has dragged down recent profit margins.

However, the company is willing to sacrifice short-term income to build an unrivaled competitive advantage over the long-term. Owning the entire supply chain improves efficiency and control.

Amazon is also disrupting the broader transportation sector. Their foray into offering shipping services marks Amazon‘s evolution into a stand-alone carrier.

As Amazon competes for merchants currently using FedEx and UPS, it could potentially take billions in revenue from those legacy courier companies. This emerging threat will likely force UPS and FedEx to rethink pricing and services.

One thing is certain – Amazon has permanently raised the bar on ecommerce shipping speeds. To stay competitive in online retail, sellers need shipping strategies tailored to the reality of Prime delivery.

Fulfilling orders in-house, optimizing Amazon fulfillment services, and leveraging carriers like UPS gives ecommerce sellers the capabilities needed to thrive.