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UPS, FedEx stocks fall after report of Amazon testing new delivery service


The service began two years ago in India, and Amazon has been slowly marketing it to US merchants in preparation for a national expansion, said the people, who asked not to be identified because the USA pilot project is confidential. The service began on a trial basis this year in West Coast states with a broader rollout planned in 2018, the people said.

Amazon declined to the comment on the matter.

According to Bloomberg, Amazon.com, Inc (NASDAQ: AMZN) is now testing its own delivery service system to make more products available for free two day delivery and to decrease inventory in the overcrowded warehouses, according to sources familiar with the matter.

Amazon is taking on a greater role in how third-party sellers ship to customers.Robert Galbraith / REUTERSAmazon is taking delivery seriously.

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

The disruption that Amazon might cause has been downplayed by UPS in the past.

The company could still use FedEx and UPS for delivery, but it will be decided by Amazon how a parcel will be sent instead of leaving the choice up to the seller. Secondly, one doubts FedEx and UPS are going to welcome a competitor with open arms and smiles, especially since this means they're losing business. Specifically, it is dabbling in a program created to make more products available for free two-day delivery and relieve overcrowding in its warehouses, according to Bloomberg. The company issued refunds to many shoppers and may have signaled that it is too dependent on shipping partners during its busiest times. Not only do they have to deal with Amazon to reach customers, this service would appear to allow Amazon to dictate order fulfillment as well.

He told analysts that the overwhelming majority of business at FedEx is from business to business as more than 85% of its business does not have anything to do with online sales or e-commerce.

It's important to remember that Amazon is not the only e-commerce game in town.

Shares at Amazon have outperformed the delivery companies thus far in 2017, as the giant of e-commerce is up by 29% through the first nine months, while UPS is up 4% and FedEx up 19%.

Amazon has always been experimenting with making deliveries faster. So what'll happen once they start shipping packages themselves? What if Amazon used excess capacity in the warehouse of their merchants to store its own goods or those of other merchants?

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