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Watch Out FedEx & UPS, Amazon Is Testing Its Own Delivery Service

Watch Out FedEx & UPS, Amazon Is Testing Its Own Delivery Service

Bloomberg reports Amazon (NASDAQ: AMZN) is testing a new delivery service intended to make more products available for free 2-day delivery and to relieve overcrowding in its warehouses.

This move would push the retailer deeper into those functions that are handled by UPS and FedEx, two companies whose shares may come under pressure if investors fear Amazon more broadly encroaching on the logistics space.

According to anonymous sources, the project is called Seller Flex and a trial of the service began in the West Coast states earlier this year, with broader rollout planned for next year.

Seller Flex began two years ago in India—a market critical for Amazon—and Amazon has been slowly marketing it to its U.S. merchants in preparation for national expansion. The service would have Amazon oversee the pickup of packages from the warehouses of third-party merchants and their deliveries to customers’ homes.

Amazon controlling more of the shipping process itself would give the company greater flexibility and control over deliveries, help it save money through volume discounts, and would help it reduce congestion in its own warehouses by keeping merchandise at sellers’ warehouses.

This news comes after the internet giant has tested multiple new delivery methods in the last couple of years, including Amazon Locker—where customers order online and pickup from a Locker in a location nearby—and Pickup Points.

In morning trading, UPS shares fell as much as 2.1% to $116.52, and FedEx fell as much as 1.6% to $217.77.

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