Also, I'm not really sure this makes sense, if it is only for delivering Amazon packages. Surely FedEx/UPS have better economies of scale as they can deliver everyone's packages?
It's been a very long time since you've seen a company do total vertical integration well.
At least in the UK the delivery/logistics market has razor-thin margins with relatively high capital costs. Is this really the best use of Amazon's capital vs spending it on developers or content for their other services?
They also have profit margins that could be taken by Amazon. Amazon has been putting warehouses near where it sells the most product which means average delivery length has been dropping. I could easily see Amazon beating UPS at local delivery. Especially so with grocery delivery in the mix--they're already stopping by your building to deliver food, why not drop the morning's packages as well?
It will be interesting to see if this affects relative prices. It could well mean that generalists have to put up their prices in rural areas.