Amazon Testing Its Own Delivery Service

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The big players in the space are FedEx and UPS, and Amazon sees an opportunity to grab market share.

"UPS continues to support Amazon and many other customers and we don't make comments about their business strategies or decisions regarding their utilization of UPS services", UPS said in an emailed statement to the news outlet.

News of the test sparked investor concern that the world's largest online retailer would upend the shipping market. and United Parcel Service shares were down more than 4 percent in afternoon trading.

Plus, Amazon is vying to be with its customers from beginning to end, not passing off the most important task, fulfillment, to another company.

Thus far, despite operating an elaborate network of fulfillment, sortation and delivery centers, Amazon has ceded control over the "last mile" to the companies it now looks set to start competing with. "Firstly, they are likely to lose business from Amazon; this will be slow at first but will accelerate as Amazon rolls out more of its own delivery services", Saunders wrote.

The new service will undercut UPS and FedEx on price, according to the report, although it did not include any details about its pricing structure.

According to several reports, Amazon is going to be rolling out Shipping with Amazon in Los Angeles. According to Business insider, past year UPS snagged 30% of Amazon's total US shipments.

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UPS expected to deliver 750 million packages during last year's holiday season, it said in December - 40 million more than its year-before shipments of 712 million packages. Amazon has since become the sole owner of the French company.

In turn, Amazon handed out scores of gift cards and refunded shipping costs to affected customers. "Expanding their delivery service to businesses is a ideal example of this", Ray Grady, president and Chief Customer Officer at CloudCraze, tells Small Business Trends in an email.

The record shopping that took place during last November's Black Friday weekend created a bit of pressure on major shipping providers, leading UPS to warn of delays.

Amazon is seeking full control of its supply chain, something which Maharaj said was just a matter of time.

In a regulatory filing submitted by Amazon to the Securities and Exchange Commission, they say "We rely on a limited number of shipping companies to deliver inventory to us and completed orders to our customers". To do this, Amazon sends their own truck to pick up the sellers' products.

"Shipping with Amazon", or SWA, would involve Amazon making pickups from third-party merchants selling items on its site. He has written for Reuters, Bloomberg, Crain's New York Business and The New York Times.