How Amazon Is Now Threatening FedEx and UPS

Amazon is taking on a greater role in how third-party sellers ship

Online retailing behemoth Inc.

Amazon (AMZN) is developing its own delivery service, according to reports, prompting concerns about the businesses of shipping-giants UPS (UPS) and Federal Express (FDX). By doing so, Amazon is potentially taking business away from other delivery companies including UPS and FedEx. The project, which is dubbed "Seller Flex", was deployed in West Coast states on a trial basis earlier this year, and is eyeing a broader rollout in 2018.

The service first began in India, and Amazon began to slowly push it into USA consumers. It would go along with programs like Seller Fulfilled Prime and Fulfillment by Amazon, which lets third-party sellers send their goods to Amazon warehouses and get them under the Prime rapid delivery umbrella.

Amazon has invested heavily in its logistics network over the years and taken on losses to build it out. As of 10am ET, shares for Amazon were up 7.3 per cent at $973.38.

In March, FedEx CEO Fred Smith was quoted as saying a move like that wouldn't be a huge disruptor for his company given that 85 percent of its business is business to business rather than e-commerce.

When contacted by Reuters, Amazon said it was using the same carrier partners to offer the program that it has used for years, including UPS, USPS and FedEx.

FedEx and UPS have yet to comment.

With the option of handling more deliveries on their own, that would provide Amazon more flexibility and control while allowing the company to save money. And with its latest actions, the company is getting closer to becoming a real challenger in two industries: delivery and apparel.

There are three main advantages for Amazon making this change beyond the potential for more delivery income via merchants.

Amazon is constantly experimenting to shorten delivery times and reduce costs.

It launched Amazon Flex, which uses independent contractors driving their own vehicles to deliver packages from Amazon shipping hubs, guided by a smartphone app. Online holiday spending in the USA will hit $129 billion this year, up 12 percent from a year ago, according to Forrester Research Inc.

Related News:

Most liked

Gravitational waves detection picks up Nobel Prize in Physics
When this discovery was made public a few months later then it was a furor amongst the scientist community and local people. They are Barry Barish and Kip Thorne of Caltech and Rainer Weiss of the Massachusetts Institute of Technology .

Turkish President Erdogan meets Rouhani in Tehran
Ayatollah Khamenei made his comments in a meeting with Turkish President Recep Tayyip Erdogan in Tehran on Wednesday. Mr Rouhani also said that Tehran and Ankara are planning to expand their economic ties.

Verstappen wins Malaysian GP ahead of Hamilton
Lewis Hamilton didn't win the race, but it was kind of a win nonetheless. Vettel experienced an engine problem that forced an engine change.

US Boots 15 Cuban Diplomats out of Washington
Mr Tillerson said the USA is maintaining diplomatic relations and will cooperate with Cuba while the investigation continues. Tillerson said the maintaining diplomatic relations and will cooperate with Cuba while the investigation continues.