Amazon is on the verge of rolling out a new delivery service that will compete with carriers like FedEx and UPS, according to a report from the Wall Street Journal.
Amazon will kick off the service, reportedly dubbed “Shipping with Amazon” in Los Angeles in the coming weeks. Amazon will deliver items from third-party sellers directly to customers, bypassing traditional carriers. Amazon later plans to expand the program to cover more businesses and cities, according to the report that cites people familiar with the intiative.
We reached out to Amazon for more details about the program, and here’s what the company said in a statement: “We’re always innovating and experimenting on behalf of customers and the businesses that sell and grow on Amazon to create faster lower-cost delivery choices.”
It is unclear if the service will look more like UPS or FedEx with uniformed drivers in branded trucks, or Amazon’s Flex delivery program with independent contractors using their vehicles to drop off packages. WSJ reports that Amazon will seek to undercut the carriers on pricing.
Shares in both UPS and FedEx were down Friday morning following news of Amazon’s latest logistics move.
This is not the first rumbling about Amazon’s growing desire to exert greater influence over deliveries. In October, reports indicated Amazon was looking at overseeing pickup and delivery of items from third-party seller warehouses to customers, taking over some of the functions of shipping partners like UPS and FedEx.
That Amazon might want greater control over the delivery process is not a big surprise. The convenience of rapid delivery has played an important role in Amazon’s rise in the retail world, so much so that other retail giants are building out similar networks. One of Amazon’s chief competitors, Walmart introduced free two-day shipping on millions of items for orders over $35 earlier this year. Just this week it purchased a New York company called Parcel to bolster same-day delivery in the Big Apple.
Amazon has invested heavily in its logistics network over the years and taken on heavy losses to build it out. Amazon has constructed countless fulfillment centers around the globe to speed up delivery times. Amazon has fleets of trucks, more than 30 cargo planes and is building a $1.5 billion cargo hub currently under construction at Cincinnati/Northern Kentucky International Airport that eventually could accommodate 100 aircraft.
