Amazon Is Launching Its Own Shipping Service To Fight FedEx And UPS

Amazon is testing a new delivery service for shipping goods for third parties that sell on its website, Bloomberg reported on October 5, citing unnamed sources. The decline put the stock on track for a third-straight loss since Monday's record close of $120.79.

"But if you look at the world of e-commerce and double-digit growth year after year, FedEx and UPS are still going to get their share of growth".

Amazon has already launched a test run of its delivery service, purportedly dubbed "Seller Flex" in West Coast states ahead of a projected larger rollout in 2018, Bloomberg reported. He explained that the stock of drug store retailer Walgreens has struggled after news that Amazon could be looking to break into the multibillion-dollar pharmacy market.

Amazon's losses from shipping were $7.2 billion in 2016.

The company will be overseeing pickup of packages from warehouses of third-party businesses who sell on Amazon Seller Central. The new service would function similar to UPS and FedEx.

Over the past two years, Amazon has been testing this service in India while slowly marketing it to US merchants. Bloomberg cited analyst estimates that Amazon accounts for 5 to 10 percent of UPS revenue, and FedEx has said the retail giant makes up less than 3 percent of sales.

Of course, from a customer perspective, this means cheaper shipping and faster delivery, as well as the expansion of services like Amazon Locker, so the majority of Amazon shoppers may not care. "We support all our customers with industry-leading e-commerce solutions and expect to expand these relationships further in the future". Rather than relying on the delivery services, Amazon will pick up products from vendors and deliver them to customers.

"We don't comment on speculative news stories but there continues to be reporting related to our networks and the transportation industry that demonstrates a clear misunderstanding of the scale, infrastructure and complexity involved in running a global transportation network", according to FedEx SVP of Integrated Marketing and Communications Patrick Fitzgerald. Meanwhile, the company specifically named Amazon as a potential competitor in the risk factors.

"Alexa is the brain behind Echo", said a news release. Besides giving the retailer more flexibility and control over the last mile of delivery, the pilot program is slashing operating costs through volume discounts, and reducing congestion in Amazon's warehouses, the report said.