Shares in logistics companies United Parcel Service (UPS) and FedEx (FDX) dropped in Monday’s pre-market trading after e-commerce giant Amazon (AMZN) opened its vast logistics network to all businesses.
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200% short exposure to AMZN with AMZOAmazon Launches Supply Chain Service
In a statement, Amazon announced that businesses of all types and sizes can now use its entire network to move, distribute, fulfill, and ship their goods and products. The company launched the Amazon Supply Chain Services (ASCS) to that end.
About two decades ago, Amazon started to allow third-party sellers on its platform to use its logistics network through the Fulfillment by Amazon service. Now, the company is extending that service — which has been relied on by hundreds of thousands of Amazon sellers over the past three years, according to the company — to business across various sectors, including healthcare, automotive, manufacturing, and retail.
Amazon said consumer goods giant Procter & Gamble (PG), Post-it maker and diversified tech company 3M Company (MMM), and retailers Lands’ End (LE) and American Eagle Outfitters (AEO) have signed up for the supply chain services.
“Businesses can also benefit from Amazon’s AI forecasting models and vast supply chain data set, which help optimize inventory placement,” Amazon noted in the statement.
Logistics Companies Race to Win Customers
The ASCS launch comes after the high-profit break-up between Amazon and UPS, which is significantly reducing the volume of its delivery handled by Amazon. Amazon for years was the logistics company’s largest customer before the cutback started.
Competition in the sector remains intense, with FedEx in February commencing same-day delivery to win over customers. This is even as Amazon continues to double down on its same-day delivery push.
Is Amazon a Buy or Hold Stock?
On Wall Street, Amazon’s shares continue to enjoy a Strong Buy consensus rating from analysts. This is based on 44 Buys and two Holds assigned by 45 analysts over the past three months.
In addition, the average AMZN price target of $314.98 suggests more than 17% upside in the months ahead.
