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tiptrot.com July 17, 2018


UPS, FedEx down on report of Amazon's own delivery service

06 October 2017, 12:11 | Cedric Leonard

UPS, FedEx down on report of Amazon's own delivery service

An employee stacks items to be shipped at the Amazon fulfillment center in Phoenix

Under Seller Flex, the popular online retailer will pickup packages from third-party merchants' warehouses and then deliver the products straight to customers' homes, cutting out FedEx and UPS services, the two sources said.

Amazon is calling the project Seller Flex and plans to began on a trial basis this year in West Coast states with a broader rollout planned in 2018. While those couriers will still be used, Amazon will decide how a package is sent rather than leave that to the merchant, the report said.

Amazon has invested heavily in its logistics network over the years and taken on losses to build it out.

In fact, for FedEx and UPS, the "last mile" delivery-which is a big focus for Amazon fulfillment-is actually largely now carried out by the US Postal Service (USPS).

The disruption that Amazon might cause has been downplayed by UPS in the past. The company is not commenting on the report. If Amazon keeps expanding its e-commerce empire, saving on these deliveries could help out its bottom line, but in turn shave off some business from UPS and FedEx. The move would also likely reduce Amazon's massive spending on deliveries amid ever-increasing shipping costs.

Don't miss: Amazon's aggressive warehouse and shipping strategy is paying off.


And while FedEx suggested risks of Amazon's in-house capabilities in its 2016 10-K, FedEx explained they are well-positioned and said any negative reaction misunderstands the scale and complexity of its business.

A rush of last-minute holiday orders in 2013 forced Amazon to issue refunds to shoppers who didn't get gifts in time, highlighting the perils of being overly dependent on partners for a main part of its business pledge - quick, reliable delivery.

That Amazon might want greater control over the delivery process is not a big surprise.

FedEx shares FDX, -0.26% slipped 0.3%, after being down as much as 1.6% earlier, and were also on course for a third-straight loss from Monday's record high.

It's important to remember that Amazon is not the only e-commerce game in town. The internet e-commerce giant is up 29 percent year to date through Wednesday versus UPS' 4 percent and FedEx's 19 percent returns.



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