'Shipping With Amazon' To Launch In US; UPS, FedEx Investors Sell
Reports of Amazon.com, Inc. (NASDAQ: AMZN)'s interest in developing its own delivery service has been around since at least 2015, but now it's reportedly close to launching.
What Happened
Amazon's delivery service for businesses, dubbed "Shipping with Amazon" (or SWA) consists of the online giant picking up items from businesses and shipping them to consumers, The Wall Street Journal has reported. While this new business hasn't been confirmed by the company yet, it's expected to roll out in Los Angeles in the coming weeks and should expand to other cities by the end of the year.
Amazon will first offer its new service to companies that already sell their products on its platform but it could be expanded to other businesses, WSJ said. Amazon could also be looking to undercut rival shipping companies on price, namely United Parcel Service, Inc. (NYSE: UPS) and FedEx Corporation (NYSE: FDX).
Why It's Important
Amazon may be one step closer to building its own freight and parcel delivery network and there were multiple reports over the years that confirm its ambitions. Analysts at Credit Suisse said in early 2016 Amazon is a "freight forwarder" company after reports showed that Amazon registered with the Federal Maritime Commission.
It also appears Amazon won't be ending its relationship with its existing delivery partners, according to WSJ. If Amazon's delivery system is unable to complete a delivery it will be handed over to the U.S. Postal Service and other carriers to finalize a delivery.
What's Next
It remains to be seen if Amazon will proceed with its ambitions, but UPS and FedEx investors appear to be not willing to wait and see. Shares of both shipping companies were each trading lower by more than 5 percent early Friday morning. Amazon was trading up less than 1 percent.
Report: Amazon Is Toying With A New Delivery Service That Could Replace UPS And FedEx
FedEx, UPS Shrug Off Amazon Challenge...For Now
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