Following reports that Amazon.com is planning to inagurate its own delivery service, which would directly compete with the U.S. package delivery companies, shares of United Parcel Service Inc and FedEX fell by two percent on Friday.
Amazon is a one stop shop for home goods, electronics, furniture, clothing and more, but in order to get items to homes, the e-commerce giant has to depend on delivery services like FedEx and UPS.
That may change in the coming weeks though, as the WSJ reports that Amazon will inagurate its own delivery service.
Dubbed, “Shipping with Amazon” (SWA), the service will pick up packages from businesses and deliver them to customers.
Sources claim that Amazon will begin rolling out the service in Los Angeles within the next few weeks with third-party sellers that do business through Amazon.com.
The company then plans to expand even further before the end of the year, even opening up the service to businesses that are not third-party merchants.
WSJ first reported on a delivery service pilot program from Amazon back in 2016, and this new initiative appears to be the result of a successful test run.
SWA rolled out some time ago in London and, as WSJ points out, Amazon already delivers its own orders in 37 US cities. Between Amazon Key, an expansion into ocean freight and the establishment of an air cargo hub, Amazon has made major strides in building a parcel delivery network in recent years.
Considering the decades FedEx and UPS have had to build out their networks, observers say it will be an uphill climb for Amazon to make a dent in the industry.
However, Amazon has reportedly been working on making its own logistics network a reality after a disappointing holiday season in 2013 during which countless packages were delivered late.
Meanwhile, those familiar with Amazon’s plans say that the company will undercut FedEx and UPS when the service launches in full. Since it already delivers some of its own packages, Amazon can fill extra space in its trucks with more packages, which will not add to the overhead.