How Amazon Is Now Threatening FedEx and UPS

October 5, 2017 by Chris Lange

Amazon.com Inc. (NASDAQ: AMZN) shares saw a nice bump on Thursday on reports that it is experimenting with its own delivery service. This is not good news for the likes of FedEx Corp. (NYSE: FDX) and United Parcel Service Inc. (NYSE: UPS). It seems that Amazon has found another industry to terrorize, and even though the drop seen at FedEx and UPS might appear to be marginal, it could hurt if Amazon can get its delivery service off the ground.

Considering the current trends of ever more companies expanding their omnichannel and e-commerce operations, who delivers the goods makes a nice chunk of change. If Amazon keeps expanding its e-commerce empire, saving on these deliveries could help out its bottom line, but in turn shave off some business from UPS and FedEx.

The goal of Amazon’s delivery service is to help expand the items available for its free two-day shipping and reduce overcrowding in company warehouses. Also handling its own deliveries would allow Amazon greater flexibility and ultimately let it save money.

Over the past two years, Amazon has been testing this service in India while slowly marketing it to U.S. merchants. According to sources close to the matter, Amazon is calling the project “Seller Flex.” This service began on a trial basis on the West Coast earlier this year, expanding further in 2018.

Shares of Amazon were last seen up 0.8% at $972.78, with a consensus analyst price target of $1,153.60 and a 52-week trading range of $710.10 to $1,083.31.

FedEx shares were up 0.9% at $220.27. The stock has a 52-week range of $168.00 to $227.00 and a consensus price target of $232.35.

UPS traded down 0.6% at $117.19, within a 52-week range of $102.12 to $120.80 and with a consensus price target of $115.68.

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