Amazon has invested heavily in its logistics network over the years and taken on losses to build it out. The news had a negative effect on the shares of Amazon's long-time delivery partners United Parcel Service Inc. and FedEx Corp.
"We don't comment on speculative news stories but there continues to be reporting related to our networks and the transportation industry that demonstrates a clear misunderstanding of the scale, infrastructure and complexity involved in running a global transportation network", according to FedEx SVP of Integrated Marketing and Communications Patrick Fitzgerald.
Bloomberg reports the name of the program is Seller Flex, and it is another example of Amazon's push to help third-party sellers speed up their deliveries.
Of course, from a customer perspective, this means cheaper shipping and faster delivery, as well as the expansion of services like Amazon Locker, so the majority of Amazon shoppers may not care. (NYSE:UPS) and FedEx Corporation (NYSE:FDX) typically handle. It would also essentially expand the number of Amazon's distribution centers to include all seller's warehouses.
For it's part, Amazon said it's not looking to replace its current shipping relationships anytime soon. That centralized approach can create logjams, particularly during the busy holiday shopping season.
"Seller Flex would also give Seattle-based Amazon more visibility into the warehousing and delivery operations of its merchant partners, potentially helping it make full use of their product inventory, storage space and proximity to customers while still guaranteeing quick delivery". And they will still need FedEx and UPS to deliver for them. News of Amazon planning its own delivery service is likely the cause of this drop.
He told analysts that the overwhelming majority of business at FedEx is from business to business as more than 85% of its business does not have anything to do with online sales or e-commerce. That's why the fashion industry is just one among many on edge as it awaits Amazon's next move, especially since the e-commerce giant has made no secret of its apparel aspirations. The internet e-commerce giant is up 29 percent year to date through Wednesday versus UPS' 4 percent and FedEx's 19 percent returns.
Amazon is constantly experimenting to shorten delivery times and reduce costs.