Published: Fri, October 06, 2017
Markets | By Rosalie Gross

Amazon's Plans May Hurt UPS, FedEX

Amazon's Plans May Hurt UPS, FedEX

Amazon has been testing the new service in India for two years, Bloomberg said, adding it was deployed in West Coast states on a trial basis earlier this year.

Amazon is calling the project Seller Flex, one person said.

Once again raising the specter of cutting out more business to UPS and FedEx, Amazon is reportedly testing a program that involves making local deliveries from the warehouses of retailers selling on its marketplace, according to a report from Bloomberg. Some third-party merchants also store their goods with Amazon.

"Amazon is a valued UPS customer", said Steve Gaut, a UPS spokesman. "We support all our customers with industry-leading e-commerce solutions and expect to expand these relationships further in the future", the statement said.

The new delivery program is called "Seller Flex". The service is meant not only for businesses to reach customers but also for home-to-home delivery in as little as two hours in selected cities.

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FedEx and UPS have yet to comment. The third is access to more warehouse space, which takes the pressure off Amazon's own storage locations and should allow them to operate more efficiently. But that system has been strained during the holiday shopping season. The company issued refunds to many shoppers and may have signaled that it is too dependent on shipping partners during its busiest times.

While FedEx and UPS don't disclose what percentage of revenue comes from Amazon, their exposure is below 10%, according to company representatives and analysts.

FedEx shares were down less than 1 percent. That's why the fashion industry is just one among many on edge as it awaits Amazon's next move, especially since the e-commerce giant has made no secret of its apparel aspirations.

The online giant is experimenting with a program that rivals services handled by longtime partners UPS and FedEx.

Amazon doesn't always offer the cheapest price for goods. So what'll happen once they start shipping packages themselves? Now, Amazon will be able to deliver the third-party's products through its own service. Online holiday spending in the USA will hit $129 billion this year, up 12 percent from a year ago, according to Forrester Research Inc.

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