According to Bloomberg, Amazon.com, Inc (NASDAQ: AMZN) is now testing its own delivery service system to make more products available for free two day delivery and to decrease inventory in the overcrowded warehouses, according to sources familiar with the matter.
Amazon is calling this major expansion “Seller Flex”, according to the sources.
Amazon will now have full control of its eCommerce business if the company does launch its own delivery service. Amazon won’t have to rely on other services to be able to deliver its products.
The company has used other delivery services such as FedEx Corp. (NYSE:FDX) and United Parcel Service Inc. (NYSE:UPS). During premarket hours on Thursday, UPS shares fell 2 percent and FedEx shares fell 1.7 percent.
The service first began in India, and Amazon began to slowly push it into U.S. consumers. Earlier in the year, Amazon has already launched a trial for the service in West Coast states and had intentions to go nationwide in the coming years.
The company will be overseeing pickup of packages from warehouses of third-party businesses who sell on Amazon Seller Central. Now, Amazon will be able to deliver the third-party’s products through its own service.
In August, Amazon announced its new refund policy and it caused some controversial issues among third-party sellers. The policy stated that all sellers must abide by Amazon’s refund policy, instead of their own business practices in hopes to raise customer satisfaction.
The problem with the refund policy was that it created shipping problems for the sellers. The policy that Amazon issued said that items refunded or returned back would ship back via UPS. There are many sellers on Amazon Central who use P.O. boxes for returns, and UPS does not deliver to P.O. boxes.
Now, with the new delivery service by Amazon itself, this will eliminate the hassle of the third-party sellers to deal with other delivery services. The service will give Amazon more control over its own business and as well providing top customer satisfaction with last minute deliveries. It will also save the company expenses and avoid backup in the warehouses.
Amazon has always been experimenting with making deliveries faster. The company has introduced many new options such as Seller Fulfilled Prime, which allows third-party sellers to deliver items within two days via Amazon Prime, and same day delivery service.
According to CNBC, Amazon shares are outperforming the delivery companies again this year so far. The internet e-commerce giant is up 29 percent year to date through Wednesday versus UPS' 4 percent and FedEx's 19 percent returns. The S&P 500 is up 13 percent in the same time period.
Amazon declined to the comment on the matter.