Amazon Announces New Delivery Service to Challenge FedEx and UPS

10:08 10/06/2017

Amazon is attempting a new delivery model called “Seller Flex” where AMZN  will pick up packages from third-party sellers on its website and deliver the products to customers. This service began two years ago in India and Amazon has been slowly marketing it to U.S customers preparing for a national expansion.

Shares of UPS and FedEx dropped 1.4% and 0.6% today shortly after the markets opened after Amazon reported the breaking news.

Baird analyst Colin Sebastian wrote, “Given the investments that Amazon is making in fulfillment infrastructure and transportation to support its own retail business, we view it simply a matter of time until they offer these services to third parties more broadly.”

In December 2016, UPS CEO David Abney said in an interview with CNBC, “We don’t believe that Amazon’s strategy is to do it themselves and the reason we believe that is we have this huge infrastructure, we’re investing in technology, we have a great mutual relationship with them.”

Amazon is exceeding the other two delivery companies’ performance again this year as of right now. AMZN  is up 29% this year versus UPS’ 4% and FedEx’s 19% returns. The S&P 500 is up 13% on the year as well.

FedEx’s Senior VP in marketing and advertising responded to the news release by Amazon, “FedEx and other transportation providers are innovating as it relates to new services for e-commerce residential deliveries, but that is only one piece of the capabilities that we provide. Demand for our global portfolio continues to grow.”

UPS also weighed in their perspective saying “Amazon is a valued UPS customer”. They support all their customers with ‘industry-leading ecommerce solutions’ and expect to expand their relationships in the future. “UPS continues to experience topline growth and margin enhancement driven by business-to-consumer volume growth and strong international expansion,” the delivery company added.

This article has been provided by a Chasing Markets contributor. All content submitted by this author represent their personal opinions, and should be considered as such for entertainment purpose only. All opinions expressed are those of the writer, and may not necessarily represent fact, opinions, or bias of Chasing Markets.
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