Amazon is making a play for its own shipping service

Amazon is making a play for its own shipping service

Amazon is making a play for its own shipping service

The service, which will handle shipments from third-party sellers on Amazon, is slated to launch this year in Los Angeles after a trial that started in 2017.

In March 2016, FedEx officials said they weren't surprised by Amazon's move to build out its USA delivery infrastructure by leasing cargo jets and buying a stake in Air Transport Services.

In 2015, Amazon bought and deployed thousands of Amazon-branded trailers in the U.S.to ferry shipments from its fulfillment centers to local sorting hubs. The company certainly has the tech and innovation chops, but scaling such an operation is a major challenge.

The new service will undercut UPS and FedEx on price, according to the report, although it did not include any details about its pricing structure.

Amazon would not comment on the reports and in a statement to USA TODAY said only that it was always innovating and experimenting on behalf of customers and the businesses that sell on Amazon to create faster, lower-cost delivery choices.

An Amazon entry into the delivery business would "send shivers down the spines of the traditional delivery companies", said Neil Saunders, the managing director of GlobalData Retail. "We have to earn that business every day".

The proposed service would allow third party sellers - whose goods make up the majority of those sold on Amazon - to have an Amazon truck come to their warehouse, pick up pallets of packages and take them to an Amazon fulfillment center where they would be inserted into Amazon's formidable delivery system.

Four years ago, Amazon acquired a 4.2% stake in United Kingdom shipping service Yodel and a 25% stake in French delivery service Colis Prive.

Shipping With Amazon has the potential to address at least one of those three factors: cutting costs.

Why Would AMZN Test Shipping With Amazon?

"There is tremendous opportunity in the business-to-customer market and more growth coming to the sector and UPS, irrespective of how other companies shift strategies", UPS spokesman Glenn Zaccara said.

FedEx and UPS shares fell by more than 2 percent on Friday morning as the market volatility continued. "It's important for businesses to own the ecommerce experience and the customer from end to end and not outsource or give up margins to Amazon". But the company has already shown a willingness to get more hands-on with its supply chain and delivery process, so SWA is an unsurprising next step. But SWA will get their attention, Webb said. Last year, the company spent as much as $20 billion ensuring its products made it to customers. "We can expect this initial rollout to serve as a basis for improving the offering, with Amazon taking an iterative approach as they reach new geographies".