Amazon Testing Own Delivery Service in Confidential Project

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. From Amazon Prime Air jets to its Flex service, where independent contractors deliver packages for Amazon, the company is employing more of its own solutions to complement traditional shippers like UPS and FedEx.

Shares of delivery companies such as FedEx and UPS are falling as investors become anxious that the delivery service of Amazon.com is set to disrupt the entire industry.

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.

FedEx has announced that it will expand its same-day delivery service to 1,800 US cities in 30 markets. Customers may see their favorite third-party sellers jumping ship rather than be consumed by degrees by Amazon.

Don't miss: Amazon's aggressive warehouse and shipping strategy is paying off.

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.

"We are using the same carrier partners to offer this program that we've used for years, including UPS, USPS and FedEx", Amazon spokesperson Kelly Cheeseman wrote in an email to MarketWatch.

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. Not only do they have to deal with Amazon to reach customers, this service would appear to allow Amazon to dictate order fulfillment as well. The reason? Amazon CEO Jeff Bezos noted in the company's year-end earnings release that more than 50 million items are now eligible for free two-day shipping, an increase of 73 percent from the previous year.

It's important to remember that Amazon is not the only e-commerce game in town.

The project underscores Amazon's ambitions to expand its logistics operations and wean itself off the delivery networks of UPS and FedEx.

The online giant is experimenting with a program that rivals services handled by longtime partners UPS and FedEx.

It launched Amazon Flex, which uses independent contractors driving their own vehicles to deliver packages from Amazon shipping hubs, guided by a smartphone app.

But the popularity of this service strains Amazon's capacity during the end-of-year holidays.


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