Amazon’s Next Push for Retail Dominion: Package Delivery Service

In a move that’s poised to shake up the shipping industry, Amazon.com Inc., is reportedly planning to debut a package delivery service that will directly compete with FedEx and UPS.

Citing people familiar with the matter, The Wall Street Journal today reported that the e-commerce giant will roll out Shipping with Amazon, intended to cut out the middleman by sending drivers to warehouses and other retailers for package pickup, then courier to consumers in the 37 cities in which it already delivers. The offering will roll out in Los Angeles within the next few weeks and expand to other cities across the U.S. throughout the year, the report noted.

Starting with its registered third-party merchants, WSJ reported that Amazon’s program will likely undercut FedEx and UPS on pricing, although exact rates remain uncertain. Following the newspaper report this morning, shares of both FedEx Corp. and United Parcel Service Inc., fell into the red. They remained down throughout the day, with UPS in the hole more than 4 percent to $104.83 and FedEx down 2.7 percent to $232.80 as of 3 p.m. ET.

“We’re always innovating and experimenting on behalf of customers and the businesses that sell and grow on Amazon to create faster lower-cost delivery choices,” an Amazon spokesperson told FN.

SWA is Amazon’s latest push in business and logistics, following last summer’s acquisition of Whole Foods and recent health care alliance with JPMorgan and Berkshire Hathaway, as well as leasing its planes and operating ocean freight services.

The news comes just a little over a week after Target began offering same-day delivery with its recent Shipt acquisition, the latest in the retail wars between the retailer and rivals Amazon and Walmart.

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