Amazon set to launch its own delivery service

by Susie Olson February 10, 2018, 6:28
Amazon set to launch its own delivery service

The company is about to finally launch its new shipping service for businesses in LA in the "coming weeks", according to a new report from The Wall Street Journal.

The threat of Amazon building is own delivery service has percolated since at least 2014, after a troublesome 2013 holiday delivery season plagued by delays of UPS and FedEx shipments due to an overload of packages.

Meanwhile, Amazon mentioned how shipping is critical to its business in its annual report.

It's hard to know how this will affect UPS and FedEx, though the latter suggested Amazon was no more than 3 percent of its business by revenue in a recent earnings call.

UPS and FedEx also consider Amazon an important customer. Entities from Netflix and the U.S. Central Intelligence Service now employ those services.

UPS had a rocky holiday season late a year ago, as it underestimated the crush of online shopping during so-called cyber week right after Thanksgiving.

Meanwhile, Amazon has leased 40 airplanes, begun arranging ocean freight shipments from China to the US, and built up a corps of delivery drivers. About 4.17 million shares traded or 139.35% up from the average. Last year, the company spent as much as $20 billion ensuring its products made it to customers. And if Amazon starts delivering to businesses, it may undercut the incumbents on rates, he said.

Amazon as a customer accounts for less than 10 percent of total revenue for UPS and 4 percent of revenue for FedEx, according to Wolfe research.

As independent analyst Ben Thompson put it, Amazon's ultimate goal "is to take a cut of all economic activity".

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The company would send SWA drivers directly to retailers and warehouses to pick up parcels, cutting out other delivery services. FedEx Co. has a twelve month low of $182.89 and a twelve month high of $274.66.

Citi analyst Christian Weatherbee said Amazon hasn't yet committed significant assets to a new delivery program.

Initially, SWA will be offered as a service to merchants selling goods on Amazon's marketplace.

Amazon has narrowed its list of potential communities for its massive second headquarters to a final grouping that includes Atlanta and 19 others in the USA and Canada. By handling deliveries themselves, Amazon can theoretically speed up delivery times-and drive more people to buy Prime memberships.

FedEx released a statement in response, which read, "The headline in today's Wall Street Journal demonstrates a lack of basic understanding of the full scale of the global transportation industry".

The service, which will entail Amazon picking up packages from businesses and shipping them to consumers, could expand to more cities as soon as this year, the report said.

Amazon's muscle and influence beyond retailing have been very evident lately. The effort will roll out in Los Angeles.

Green Square Capital Llc, which manages about $1.82B and $554.35M US Long portfolio, decreased its stake in Ipg Photonics Corp Com (NASDAQ:IPGP) by 3,400 shares to 2,775 shares, valued at $514,000 in 2017Q3, according to the filing.

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