Amazon May Deliver Gut Punch To UPS, FedEx

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In addition, the shipping industry is a lucrative segment. So far, it's been tested in various pilot programs, including in London, and this initial launch is said to be limited to Los Angeles. Stifel Nicolaus upped their price target on shares of FedEx Corporation from $194.00 to $216.00 and gave the company a "hold" rating in a report on Monday, June 12th.

The push into shipping is similar to what the company built with Amazon Web Services, its web hosting and cloud computing division, which was built off of the massive data centers the company built to host its retail apparatus, said Colin Sebastian, a senior research analyst who tracks Amazon for investment firm Baird. "Shipping with Amazon" is now intended for select third-party sellers in the test, not for businesses in general, and still it is not yet ready to roll out widely to sellers on Amazon, said the person.

For Amazon, starting a delivery service is relatively easy as it already has much of the needed infrastructure in place. Since it already delivers some of its own packages, Amazon can fill extra space in its trucks with more packages, which won't add to the overhead.

Amazon is set to start a new shipping service that will directly compete with more entrenched, longstanding companies like UPS and FedEx, according to The Wall Street Journal. Shipping With Amazon will be used to deliver products sold by third-party vendors on the shopping site. There were reports that Amazon had also negotiated with Boeing that year for jets to launch its own air cargo business.

The e-commerce giant historically has optimized its supply chain, distribution and logistics and then handed off to carriers such as UPS, FedEx and the U.S. Postal Service. It will eventually roll out to more businesses and other cities. SWA will see drivers picking up shipments from warehouses and businesses and delivering the packages when it is able, according to WSJ sources.

Global Forwarding also has a specialized program to support Fulfillment by Amazon customers in the USA and overseas from cargo pick-up to delivery. 2,586,392 shares of the company's stock were exchanged, compared to its average volume of 1,892,149.

For their part, UPS and FedEx on Friday offered confidence in their own businesses. The two companies are yet to respond to the report, neither has Amazon made any official statement to that effect.

So, while it is not yet possible to login to Amazon and schedule a package pickup and subsequent delivery, that day seems to be on its way. $3.38M worth of FedEx Corporation (NYSE:FDX) shares were sold by DUCKER MICHAEL L. Colleran Donald F sold $2.20 million worth of stock or 10,000 shares. Earlier, Amazon announced it will be making Whole Foods deliveries (which it acquired in July) within a 2-hour window.

Shipping with Amazon will also likely benefit customers with an Amazon Prime account.

The reason behind the company's foray into the delivery world is a rather pragmatic $21bn in current shipping costs as sussed by MarketWatch.