Amazon to launch own delivery service to undercut rivals

Delivery Service

Delivery Service

(UPS) and FedEx Corp, should come as no surprise to anyone. So far Amazon has taken leases on approximately 40 airplanes and has also started arranging ocean freight shipments to the United States from China.

"SWA represents a natural extension of third-party logistics services, particularly in markets where Amazon has the delivery density to offer a competitively-priced alternative to UPS and FedEx", Baird said in the note. The goal is to get products from the seller to an Amazon fulfillment center or to the end delivery service, more quickly and more cost-effectively.

The experiment is expected to launch sometime later this year in the Los Angeles area with a handful of companies that sell goods on Amazon's site, sources familiar with the project who asked to remain anonymous because they weren't authorized to speak publicly told USA TODAY.

Amazon is poised to launch its own delivery service, aiming to undercut industry leaders like UPS and FedEx and increase control of its own logistics.

Amazon's annual 10K filing shows that shipping costs past year rose 34% to approximately $21.7B, which represents about 15% of the company's revenue, up from 12.3% in 2016 and 8% in 2012. According to a senior research analyst at Loop Capital Markets, Anthony Chukumba, Amazon would need 30 years as well as at least $30 billion to recreate the scale of operations that FedEx and UPS now have.

UPS will continue to support Amazon and all other valued customers, said spokesperson Glenn Zaccara. "We have to earn that business every day". Those of Amazon also slipped since analysts urged caution on the grounds that building a delivery network that is competitive is not easy.

At least in its initial phase, the test would only involve deliveries between Amazon merchants and Amazon's own fulfillment centers, not delivery to customers' homes. This is just one of many live Amazon seller training videos recently released by Amazing.com.

In an interview with Walt Mossberg at the Code Conference in 2016, the company's Chief Executive Jeff Bezos said "Amazon's business with carriers like UPS and the U.S. Postal Service is growing even as the company gets more involved in the delivery realm". A spokeswoman said Amazon is always trying to innovate and experiment "on behalf of customers and the businesses that sell and grow on Amazon to create faster lower-cost delivery choices".

The pilot project is going to be focused on delivery services for only one zip code in Los Angeles.

The media has been reporting this as basically a "killing". Investors see this as a foreboding move threatening UPS and FedEx.

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