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Amazon May Create Its Own Delivery Service to Rival FedEx, UPS

11 Oct, 2017 By: Doug McPherson

SEATTLE – Amazon is looking to create its own delivery service to make more products available for free two-day delivery and relieve overcrowding in its warehouses, Bloomberg News reports.

The report says Amazon “could still use” United Parcel Service and FedEx for delivery, “but the company will decide how a package is sent instead of leaving it up to the seller.”

Amazon launched its own delivery service two years ago in India, and Amazon has been slowly marketing it to U.S. merchants to prep for a national expansion, said the sources, who asked not to be identified because the U.S. pilot project is confidential.

Amazon is calling the project Seller Flex, which began on a trial basis this year in West Coast states. A broader rollout is planned in 2018. Amazon declined to comment on the report.

Amazon will oversee pickup of packages from warehouses of third-party merchants selling goods on and their delivery to customers’ homes – work that UPS and FedEx currently handle. Shares for both companies fell as news of the service hit.

Insiders say handling more deliveries itself would give Amazon greater flexibility and control over the last mile to shoppers’ doorsteps, let it save money through volume discounts, and help avoid congestion in its own warehouses.

A UPS spokesperson called Amazon “a valued UPS customer [and] we support all our customers with industry-leading e-commerce solutions and expect to expand these relationships further in the future.” FedEx said it wouldn’t comment on Amazon’s plans.

Last year, Amazon introduced Seller Fulfilled Prime, which lets merchants who don’t stow items in Amazon warehouses still have their products listed with the Prime badge, meaning they’ll be delivered within two days. The merchants had to demonstrate they could meet Amazon’s delivery pledge, and many used UPS and FedEx for deliveries. The new service gives Amazon control over those deliveries instead, even if it continues to use third-party couriers.

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