Amazon set to launch its own delivery service


According to people familiar with the matter, SWA will see Amazon picking up packages from various businesses and delivering them to customers. Amazon has been pushing more aggressively into delivery for a while. For now, at least, Amazon will still definitely have to rely on its shipping partners to make things work. Amazon has helped fuel the boom in online shopping, but all those millions of packages are straining the networks of UPS and FedEx. The reason for investors' concern is twofold: Amazon has a long track record of successfully shaking up traditional industries, and it also happens to be among the top buyers of package delivery services in the U.S.

Meanwhile, Amazon has leased 40 airplanes, begun arranging ocean freight shipments from China to the US, and built up a corps of delivery drivers.

FedEx Corporation (FedEx) provides a portfolio of transportation, e-commerce and business services through companies competing collectively, operating independently and managed collaboratively, under the FedEx brand.

There is little doubt, however, that Seattle-based Amazon has the means to build a bigger network.

"There is tremendous opportunity in the business-to-customer market (i.e. Walmart to household deliveries) and more growth coming to the sector and UPS, irrespective of how other companies shift strategies", UPS spokesman Glenn Zaccara said. "This will be slow at first but will accelerate as Amazon rolls out more of its own delivery services", he said.

Amazon's creation of the new delivery service comes as the company pushes into new avenues of business including the acquisition of grocer Whole Foods and a newly-announced joint healthcare venture with JPMorgan and Berkshire Hathaway. The company had revenue of $16.30 billion during the quarter, compared to analyst estimates of $15.67 billion. Several took a wait-and-see approach to the Amazon threat. FedEx Co. has a 1 year low of $182.89 and a 1 year high of $274.66.

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

On or hand, Amazon signed an agreement last week with Berkshire Hathaway and PM Morgan to create a health services company that aims to reduce costs of healthcare and improve services offered to its employees in U.S. Stifel analyst David Ross said Amazon will grow its logistics business but won't be able - and may not even want - to handle all of its own deliveries.

The service would initially be developed in Los Angeles (United States), although it is expected to "expand gradually to or cities" this same year, as reported by WSJ. Following the completion of the sale, the vice president now owns 33,908 shares in the company, valued at approximately $7,163,404.08.