Retail Roundup-Macy's leans on Bluemercury; Amazon testing delivery service

Report Amazon Is Toying With A New Delivery Service That Could Replace UPS And FedEx

Amazon is testing a new delivery service for shipping goods for third parties that sell on its website, Bloomberg reported on October 5, citing unnamed sources.

Amazon is reportedly testing its own delivery service, and that news isn't sitting too well with investors in UPS and FedEx.

The goal of the program Amazon is reportedly experimenting with, which Bloomberg reports began in India two years ago and is being tested in western USA states, is to expand the breadth of items available under Amazon Prime.

Amazon has already launched a test run of its delivery service, purportedly dubbed "Seller Flex" in West Coast states ahead of a projected larger rollout in 2018, Bloomberg reported. Amazon had started its own delivery service two years ago in India. It would go along with programs like Seller Fulfilled Prime and Fulfillment by Amazon, which lets third-party sellers send their goods to Amazon warehouses and get them under the Prime rapid delivery umbrella. Amazon recorded an all-time high of almost $7.2 billion lost on shipping in 2016, according to GeekWire's analysis of the e-commerce giant's financial results.

The program, now in stealth mode, is called Seller Flex and is an extension of Amazon's current Seller Fulfilled Prime program that allows merchants to offer "Prime eligible" items without requiring them to be stored in Amazon Fulfillment Centers.


FedEx and UPS have yet to comment.

Seller Flex would help give Amazon more control and help it save money through volume shipping discounts, without clogging up space in its own warehouses, according to Bloomberg.

While FedEx and UPS don't disclose what percentage of revenue comes from Amazon, their exposure is below 10%, according to company representatives and analysts. Rather than relying on the delivery services, Amazon will pick up products from vendors and deliver them to customers. "If Amazon does take a few customers, the whole e-commerce pie is growing so fast that FedEx and UPS won't miss a beat". And they will still need FedEx and UPS to deliver for them.

The online giant is experimenting with a program that rivals services handled by longtime partners UPS and FedEx. Sometimes merchants selling through Amazon's platform can offer a lower price for new, and more often used versions of those products.

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