Amazon To Launch Delivery Service, Battle FedEx, UPS

The company will begin in Los Angeles and expand from there.

Amazon will launch a shipping business
Mark Lennihan / AP Images

The company will begin in Los Angeles and expand from there.

Amazon, which entered the grocery business in a big way in 2017 with the purchase of 400 Whole Foods stores, appears poised to enter the shipping business.

Fortune reports Amazon will begin its delivery service in Los Angeles and add other locations later.

The move will put the company in direct competition with UPS, Fed-Ex, and the United States Postal Service. While adding a new service is never easy, if the move is successful, it stands to pay off big for the Fortune 500 company.

Launching a delivery service would enable Amazon to maintain greater control over its shipping, especially from third-party sources. Currently, Amazon Prime is only able to guarantee an arrival time from Amazon and affiliated companies. If Amazon is handling the shipping, it would be able to guarantee times and that could spur an increase in the sale of Amazon Prime memberships.

Those third-party sellers will be the focus as the delivery business begins, Fortune reports.

Doing deliveries in-house would also permit Amazon to have greater control over what has traditionally been one of its largest expenses.

The service, which will be called “Shipping with America,” has already had a noticeable effect on the companies that make up Amazon’s competition. FedEx and UPS stocks were down in early trading Friday.

The creation of a shipping business comes at a time when Amazon is increasing its imprint in a number of areas.

The purchase of the Whole Foods grocery store chain in 2017 planted Amazon firmly in that business while also creating synergy for the company, which has placed pickup lockers for Amazon online sales at some of the Whole Foods stores. Amazon has also added pickup lockers on college campuses.

New Amazon stores across the United States have enabled the company to establish a physical presence while at the same time have resulted in increases in online sales by customers in those areas.

The moves into groceries and delivery raise concerns for those who have seen Amazon pushing out competitors in other businesses, including publishing.

Amazon will compete with FedEx, UPS
  Alan DIaz / AP Images

The purchase of books from Amazon and its third-party partners have had a marked negative effort on competitors such as Barnes & Noble and Books-A-Million.

The company has also established itself as a publisher, almost cornering the market on self-published paperbacks and ebooks and slowly moving into working with established writers.

Amazon has also created a tremendous amount of buzz by its competition between major U.S. cities to see which of them will become the location for the company’s second headquarters.