Amazon May Deliver Gut Punch To UPS, FedEx

Amazon May Deliver Gut Punch To UPS, FedEx

WSJ also reports that Amazon is so determined to succeed in its bid that it is prepared to lower price.

Amazon is testing a warehouse management system called FBA Onsite meant to help sellers more efficiently pick, pack, ship and manage their inventory.

A similar scenario to its entry into grocery and healthcare sector where there was a seismic reaction to the news that Amazon is the new player in town.

Amazon has narrowed its list of potential communities for its massive second headquarters to a final grouping that includes Atlanta and 19 others in the US and Canada.

UPS had a rocky holiday season late a year ago, as it underestimated the crush of online shopping during so-called cyber week right after Thanksgiving. The latter is planning to invest 7 billion dollars to improve its shipping network. FBA Onsite is said to be a software that helps sellers manage their warehouse processes so they can better meet the rigorous requirements of the Amazon Prime customer promise.

There is little doubt, however, that Seattle-based Amazon has the means to build a bigger network.

Amazon's creation of the new delivery service comes as the company pushes into new avenues of business including the acquisition of grocer Whole Foods and a newly-announced joint healthcare venture with JPMorgan and Berkshire Hathaway. Following the completion of the sale, the director now directly owns 3,610 shares in the company, valued at $779,940.50.

As independent analyst Ben Thompson put it, Amazon's ultimate goal "is to take a cut of all economic activity". "It appears to be a hard task to compete in this market as an asset light parcel delivery carrier", Citi analyst Christian Wetherbee said.

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It is not yet known how this will affect the existing relationship that exists between Amazon, UPS and FedEx-two major partners when it comes to shipping purchased goods to customers.

Amazon is likely to remain a major customer for UPS and FedEx for quite some time, complicating their relationship. Sanford C. Bernstein set a $236.00 price target on FedEx and gave the stock a "hold" rating in a research report on Wednesday, December 20th.

FedEx has consistently dismissed the notion that Amazon is a threat to its business, and executives have noted that, even if Amazon develops its own delivery service, outside shippers would have plenty of business, even in retail.

As much as it makes sense to do this in urban areas, it is unlikely that Amazon will make a move on trying to service the American hinterland.

FedEx spokesman Patrick Fitzgerald said the Journal headline showed a "lack of basic understanding of the full scale of the global transportation industry".

It has started in London, expects to launch soon in Los Angeles, with the aim of expanding to other cities this year, the report said.

This week Amazon launched two-hour grocery delivery for Prime members from Whole Foods, which it bought last summer for almost $14 billion.

Shares of FedEx fell to $234.59, while UPS was at $106.80 on the New York Stock Exchange.

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