Amazon is continually looking for ways to expand its footprint, and its newest innovation will be delivering orders from its business partners. The third-party delivery service will be dubbed “Shipping With Amazon,” reports the Wall Street Journal. The service will kick off in Los Angeles and later spread to other geographical areas.
Shipping With Amazon will compete directly with FedEx and UPS. The company said in a statement to the Journal: “We’re always innovating and experimenting on behalf of customers and the businesses that sell and grow on Amazon to create faster lower-cost delivery choices.”
Amazon will initially deliver goods from third-party sellers that work with the tech giant on its platform. Eventually, businesses not on affiliated with Amazon will also be able to take advantage of the shipping service.
Over the last few years, Amazon has grown exponentially. It has built numerous distribution centres, acquired Whole Foods, explored the use of drone technology, and developed Prime Now, which delivers certain items within hours of being ordered. Some drivers are even allowed to leave packages in customers’ homes. According to the Journal, Amazon has invested in ocean freight operations and has even built its own air cargo hub.
Earlier this week, Amazon started offering free, two-hour delivery service from Whole Food stores to Prime members living in parts of Austin, Texas; Cincinnati, Ohio; Dallas, Texas; and Virginia Beach, Va.
It will take a large financial commitment for Amazon to match the network of delivery services that FedEx and UPS spent decades building. In addition, Amazon will likely want to preserve its relationships with these two delivery giants.
In order to make its mark on the shipping industry, Amazon is willing to undercut its competitors. This will allow the retail giant to get a foothold even though it may lose money during the delivery service’s first few years of operation.
When news of Amazon’s plans went public, shares of FedEx were off 0.6 percent in early trading, and UPS stock fell 1.5 percent, according to USA Today.