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According to a new report from Bloomberg, Amazon is testing a program dubbed “Seller Flex” that would both allow more items from third-party merchants to be listed under the Prime umbrella, and provide delivery services for those sellers on its platform.
Amazon would also take care of picking up packages from its third-party merchants, as well as delivering these items to customers’ homes, potentially eliminating the need for its major delivery partners like UPS (UPS - Free Report) and FedEx (FDX - Free Report) .
While the company won’t completely stop using UPS and FedEx—these carriers will still be used for some delivery situations—Seller Flex demonstrates the growing desire by Amazon to control more aspects of its delivery logistics division; the program would also take delivery decisions out of the hands of third-party sellers.
More control would give Amazon “greater flexibility…over the last mile to shoppers’ doorsteps, [letting] it save money through volume discounts, and [helping it] avoid congestion in its own warehouses by keeping merchandise in the outside sellers’ own facilities,” writes Bloomberg.
Seller Flex builds on Amazon’s previous delivery improvements. Fulfillment by Amazon lets merchants ship goods to Amazon warehouses around the U.S. in order to be stored, packed, and shipped out, while Seller Fulfilled Prime is a program introduced last year that allows sellers to list their products under Prime even if they aren’t stored in Amazon warehouses.
The new delivery service was originally rolled out in India two years ago, and over time, Amazon has been marketing the service to its U.S.-based merchants in order to prep for national expansion; Seller Flex was piloted earlier this year on the West Coast, and the company hopes to increase it in 2018, notes Bloomberg.
Potential Impacts
Monday saw shares of both UPS and FedEx slip in the wake of the report, and the companies fell about 1.48% and 0.50%, respectively, in late-morning trading.
The threat of disruption caused by Amazon has no doubt been on the minds of these two delivery carriers, but neither have seemed too concerned about the online retailer’s encroachment over the past year. Granted, both of UPS and FedEx’s networks are vast and intricate, but Amazon is one of the most widely-used online shopping sites in the U.S.; not having as solid of a relationship with the company could be hurtful.
It will be interesting to see if UPS or FedEx takes any steps to counteract these measures, especially if Seller Flex is rolled out nationwide. Perhaps one of the carriers will develop a closer relationship with Jet.com or other online retailers that are looking to expand delivery services.
One should also consider the timing of this report. The holiday shopping season is fast approaching, and Bloomberg points out that online holiday spending will reach $129 billion in the U.S. this year. Consumers become dependent on companies like Amazon, UPS, and FedEx to send and receive gifts on time, and a busy holiday season is the perfect time to test and showcase a new delivery service, demonstrating that it can operate successfully on its own.
4 Stocks to Watch after the Massive Equifax Hack
Cybersecurity stocks spiked on recent news of a data breach affecting 143 million Americans. But which stocks are the best buy candidates right now? And what does the future hold for the cybersecurity industry?
Equifax is just the most recent victim. Computer hacking and identity theft are more common than ever. Zacks has just released Cybersecurity! An Investor’s Guide to inform Zacks.com readers about this $170 billion/year space. More importantly, it highlights 4 cybersecurity picks with strong profit potential.
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Amazon is Testing Its Own Delivery Service: How Worried Should UPS & FedEx Be?
It wouldn’t be the retail rivalry of the 21st century if e-commerce giant Amazon.com (AMZN - Free Report) didn’t announce a new initiative soon after brick-and-mortar titan Walmart (WMT - Free Report) made headlines of their own (see: Jet.com’s New Private Label Grocery Brand and Walmart Buys NYC Startup Parcel).
According to a new report from Bloomberg, Amazon is testing a program dubbed “Seller Flex” that would both allow more items from third-party merchants to be listed under the Prime umbrella, and provide delivery services for those sellers on its platform.
Amazon would also take care of picking up packages from its third-party merchants, as well as delivering these items to customers’ homes, potentially eliminating the need for its major delivery partners like UPS (UPS - Free Report) and FedEx (FDX - Free Report) .
While the company won’t completely stop using UPS and FedEx—these carriers will still be used for some delivery situations—Seller Flex demonstrates the growing desire by Amazon to control more aspects of its delivery logistics division; the program would also take delivery decisions out of the hands of third-party sellers.
More control would give Amazon “greater flexibility…over the last mile to shoppers’ doorsteps, [letting] it save money through volume discounts, and [helping it] avoid congestion in its own warehouses by keeping merchandise in the outside sellers’ own facilities,” writes Bloomberg.
Seller Flex builds on Amazon’s previous delivery improvements. Fulfillment by Amazon lets merchants ship goods to Amazon warehouses around the U.S. in order to be stored, packed, and shipped out, while Seller Fulfilled Prime is a program introduced last year that allows sellers to list their products under Prime even if they aren’t stored in Amazon warehouses.
The new delivery service was originally rolled out in India two years ago, and over time, Amazon has been marketing the service to its U.S.-based merchants in order to prep for national expansion; Seller Flex was piloted earlier this year on the West Coast, and the company hopes to increase it in 2018, notes Bloomberg.
Potential Impacts
Monday saw shares of both UPS and FedEx slip in the wake of the report, and the companies fell about 1.48% and 0.50%, respectively, in late-morning trading.
The threat of disruption caused by Amazon has no doubt been on the minds of these two delivery carriers, but neither have seemed too concerned about the online retailer’s encroachment over the past year. Granted, both of UPS and FedEx’s networks are vast and intricate, but Amazon is one of the most widely-used online shopping sites in the U.S.; not having as solid of a relationship with the company could be hurtful.
It will be interesting to see if UPS or FedEx takes any steps to counteract these measures, especially if Seller Flex is rolled out nationwide. Perhaps one of the carriers will develop a closer relationship with Jet.com or other online retailers that are looking to expand delivery services.
One should also consider the timing of this report. The holiday shopping season is fast approaching, and Bloomberg points out that online holiday spending will reach $129 billion in the U.S. this year. Consumers become dependent on companies like Amazon, UPS, and FedEx to send and receive gifts on time, and a busy holiday season is the perfect time to test and showcase a new delivery service, demonstrating that it can operate successfully on its own.
4 Stocks to Watch after the Massive Equifax Hack
Cybersecurity stocks spiked on recent news of a data breach affecting 143 million Americans. But which stocks are the best buy candidates right now? And what does the future hold for the cybersecurity industry?
Equifax is just the most recent victim. Computer hacking and identity theft are more common than ever. Zacks has just released Cybersecurity! An Investor’s Guide to inform Zacks.com readers about this $170 billion/year space. More importantly, it highlights 4 cybersecurity picks with strong profit potential.
Get the new Investing Guide now>>