Amazon has begun testing package delivery in San Francisco and Los Angeles using taxi-hailing mobile app Flywheel, according to Yahoo Finance.
Amazon is currently looking into a broader use of taxis as delivery vehicles. Taxis would represent Amazon’s latest experiment to speed package shipments to compete more directly with brick-and-mortar retailers and to seek alternatives to UPS, FedEx and the United States Postal Service after the shipping delays of holiday season 2013.
Amazon has tested its own delivery service by broadening its use of regional couriers, and teamed up with the USPS to deliver groceries and is expected to open a bricks-and-mortar location in Manhattan for returns, pickups and same-day dispatch. Amazon has even developed aerial drones for package drop-offs.
Using storefronts as warehouses isn’t anything new for bricks-and-mortar retailers, who have fought back by converting their stores into mini-warehouses, offering same-day and one-hour delivery along with in-store pickup for products ordered online.
Amazon has joined with Flywheel, whose mobile app competes with Uber and Lyft. It has summoned cabs through the Flywheel app to mini-distribution centers before loading them with as many as 10 packages bound for a single ZIP Code, paying about $5 a package for delivery within one hour.
With taxis, Amazon also may be seeking to contain shipping costs, which have risen as a percent of sales, to 8.9% last year from 7.2% in 2009, according to its filings. In October, Amazon posted its largest quarterly loss in 14 years amid a 32% jump in shipping expenses.
Flywheel is expected to announce a new round of fundraising and an expansion to 10 major cities, from its current operations in Seattle, San Francisco and Los Angeles. It has limited operations in Oklahoma City and Daytona Beach, Fla., among other smaller cities.
Amazon is battling with Google, eBay and others on same-day delivery. Google recently expanded its number of metropolitan areas where it offers Google Express from retailers including Target, and Costco. Last year, eBay bought London-based same-day delivery company Shutl and has now been testing eBay Now one-hour delivery service for more than two years, but there aren’t any plans to expand beyond five U.S. cities.