Amazon to test its own Delivery Service

An employee stacks items to be shipped at the Amazon fulfillment center in Phoenix

The news had a negative effect on the shares of Amazon's long-time delivery partners United Parcel Service Inc. and FedEx Corp. 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. And while it doesn't eliminate UPS and FedEx from the mix, it would probably move more control over to Amazon long-term.

"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", said Patrick Fitzgerald, senior vice president of integrated marketing and communications at FedEx.

Over the past two years, Amazon has been testing this service in India while slowly marketing it to USA merchants. "We would gauge earnings exposure more like mid-single digits to UPS and maybe 2 percent for FedEx", he said in an interview with " Closing Bell".

Amazon has invested heavily in its logistics network over the years and taken on losses to build it out.

"The goods need to get there in two days or less, and right now, it's UPS and FedEx that can do that best", Eade said in an interview with " Power Lunch".


Amazon's stock rose though, along with the broader market.

Don't miss: Amazon's aggressive warehouse and shipping strategy is paying off. Simply by announcing price cuts, the e-tailer coaxed 10 percent of Trader Joe devotees and 8 percent of Sprouts regulars into Whole Foods' doors, according to data analytics firm Thasos Group. However, he notes that ecommerce is growing so quickly that they won't likely face too much trouble from the change.

The fear, of course, is that Amazon can-with one decision-completely disrupt any industry it sets its sights on. The service will give Amazon more control over its own business and as well providing top customer satisfaction with last minute deliveries.

Shares at Amazon have outperformed the delivery companies thus far in 2017, as the giant of e-commerce is up by 29% through the first nine months, while UPS is up 4% and FedEx up 19%.

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