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Amazon Testing Its Own Delivery Service

15 February 2018

Much of that expenditure has gone to Fedex and UPS.

The Amazon move also comes at a time when FedEx Express, the domestic and worldwide air express business, is gearing up to spend more than $1.5 billion to modernize and expand hubs in Memphis and Indianapolis.

Research and advisory firm Forrester forecasts that 17 percent of all US retail sales will be made online by 2022, up about 5 percent from the almost 13 percent share e-commerce held of retail past year.

According to online statistics company Statista, Amazon's shipping revenue in 2016 was $8.98 billion while its outbound shipping costs were $16.17 billion. The focus is created to make more products available for free two-day delivery.

The company would send SWA drivers directly to retailers and warehouses to pick up parcels, cutting out other delivery services.

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Amazon has relied on third-party shippers for many years, but those firms have tended to become overwhelmed and backlogged during the critical Christmas holiday delivery season. The main idea is that Amazon will have flexibility and control of who delivers the package to the customer's door.

In response to the news, UPS's stock declined about 6.5% in premarket trading, while FedEx's stock fell by just over 5%.

Amazon last week launched Prime Now, a two-hour delivery service for its Whole Foods Markets.

FedEx officials have repeatedly stated they believe it would be hard for Amazon to replicate the domestic and global networks, systems and practices that FedEx has built over almost 45 years since the company's 1973 launch at Memphis International Airport.

UPS will continue to support Amazon and all other valued customers, said spokesperson Glenn Zaccara. This makes total sense, as the USPS already has workers bringing mail daily to every home in the country.

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"Amazon's rising costs to handle orders is also a outcome of the popularity of its program that allows independent merchants - from big brands like Nike to a dad selling fidget spinners from his garage - to sell their products on Amazon.com and have the option to stow their inventory in Amazon's warehouses". The idea is that third party businesses that sell goods on the company's website will now get in-house delivery services too.

A spokesman said UPS sees plenty of opportunity to grow with burgeoning e-commerce, and Memphis-based FedEx Corp. has long maintained it doesn't expect Amazon's delivery business to pose a serious threat to FedEx's bottom line in the foreseeable future. The delivery service will first launch in Los Angeles, CA.

The media has been reporting this as basically a "killing".

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Amazon Testing Its Own Delivery Service