Amazon.com, Inc. (NASDAQ:AMZN) is reportedly testing out its own delivery service.
Recent reports claim that the online retailer has been testing the delivery service out in India and more recently in the U.S. The service is going by the code name “Seller Flex.” Details about the service are still sparse due to its confidential nature, but it looks like AMZN is aiming for a 2018 launch.
Reports say that the Amazon delivery service will have its employees directly picking up goods from sellers. This is a job that companies such as United Parcel Service, Inc. (NYSE:UPS) and
FedEx Corporation (NYSE:FDX) typically handle.
There’s a few reasons that Amazon may want its own delivery service. The first is that it could allow the retailer to reduce clutter in its own warehouses by offering more goods for free two-day shipping. Another reason is that it gives the company more control over deliveries. It could also reduce costs for the retailer, reports Bloomberg.
Kevin Sterling, a Seaport Global Holdings analyst, says that the introduction of an Amazon delivery service will put pressure on UPS and FedEx stocks. However, he notes that ecommerce is growing so quickly that they won’t likely face too much trouble from the change.
UPS stock and FDX stock were down when the markets opened on Thursday. News of Amazon planning its own delivery service is likely the cause of this drop. FDX stock has mostly recovered as of noon Thursday, but UPS stock is still down 1%. AMZN stock is up 1% as of noon Thursday.
As of this writing, William White did not hold a position in any of the aforementioned securities.
