Amazon trialing new delivery system that makes FedEx and UPS obsolete

Amazon trialing new delivery system that makes FedEx and UPS obsolete

Smith added that Amazon is a great company and they have revolutionized e-commerce, but the system at FedEx that is made up of thousands of different facilities and the ability of picking up, transporting and delivering in one or two days for any two addresses located in the USA has taken decades to establish, and our thought is the risk is not great that it will be disrupted. According to sources close to the matter, Amazon is calling the project "Seller Flex".

Amazon is trialling a service called "Seller Flex" that will provide delivery services for third-party merchants on its platform, according to a new report from Bloomberg. "Amazon could still use these couriers for delivery, but the company will decide how a package is sent instead of leaving it up to the seller". In some cases, it will also handle delivery to customers, eliminating the major delivery partners of UPS and FedEx. While that might be alarmist, it's fair to ask, what will Amazon disrupt next?

FedEx said it wouldn't comment on Amazon's plans but pointed out the "scale, infrastructure and complexity" involved in running a global transportation network. If Amazon keeps expanding its e-commerce empire, saving on these deliveries could help out its bottom line, but in turn shave off some business from UPS and FedEx.

The big benefit for consumers is that Seller Flex will enable more products to be eligible for 2-day Prime shipping, which has obvious benefits for Amazon. Secondly, one doubts FedEx and UPS are going to welcome a competitor with open arms and smiles, especially since this means they're losing business.

Amazon taking greater control over the logistics of its third-party packaging gives online shoppers a more consistent experience and gives Amazon greater flexibility. 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. But that system has been strained during the holiday shopping season.

Seller Flex, which is in trials in the US and has been operational in India for two years, would allow the retailer to save money, free up space at distribution centers and provide more products via free two-day delivery. And they will still need FedEx and UPS to deliver for them. Rather than relying on the delivery services, Amazon will pick up products from vendors and deliver them to customers.

Despite these developments, shares of both FedEx and UPS are both up this year and are not far from their all-time highs. "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".

Amazon doesn't always offer the cheapest price for goods.


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