Amazon’s New Shipping Service Is Big Trouble For UPS And FedEx

Creating competition for United Parcel Service Inc. and Fed Ex Corp., Amazon will launch its own delivery service. Through “Shipping With Amazon,” the eCommerce retailer will reportedly pick up packages from businesses and deliver them to their customers, the Wall Street Journal reported.

While Amazon will start offering the service in Los Angeles to the company’s third-party sellers soon, it plans to eventually expand the service to additional cities and businesses beyond Amazon’s own sellers. While the eCommerce retailer has not made the pricing for its new service public, it is planning to charge less than UPS and Fedex.

In response to the potential competition, a UPS spokesman told the WSJ that the company continues to support Amazon – and other clients – but would not comment further. FedEx didn’t immediately respond to the WSJ.

Already, Amazon delivers a portion of its own orders in about 40 cities in the U.S. But, with the new service, Amazon expects to pick up packages from warehouses and deliver them when it can. Otherwise, the U.S. Postal Service will handle Amazon’s last-mile deliveries.

Through the program. an Amazon spokesperson said the company hoped to create more shipping options for its customers. “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,” the spokesperson said in a statement.

The news comes after reports surfaced late in 2017 that Amazon was testing the service as part of its push to expand free two-day delivery offerings and solve its warehouse overcrowding problem.

Amazon had been developing this system in India over two years, but its migration to the U.S has been somewhat slower than anticipated. And the pilot program had remained a closely guarded secret. In 2017, Amazon quietly tested the service in West Coast states and the eCommerce retailer would not confirm or deny the existence of the program.