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Amazon's New Delivery Service: What It Means for You

Amazon is reportedly preparing a delivery service called Ship with Amazon, or SWA. This would put it in direct competition with UPS and FedEx.

Credit: Jeramey Lende / Shutterstock.com

(Image credit: Jeramey Lende / Shutterstock.com)

The new program, as initially reported by The Wall Street Journal, will be rolling out in Los Angeles first. SWA will gather packages from businesses and ship them to consumers. The initial clients will be third-party stores selling goods on Amazon.com, though it's possible SWA could also be expanded to other businesses that pay for shipping.

According to the report, Amazon is planning to beat UPS and FedEx on pricing, which could make Amazon a more attractive option.

“We’re always innovating and experimenting on behalf of customers and the businesses that sell and grow on Amazon to create faster lower-cost delivery choices,” an Amazon spokesperson told Tom's Guide in a statement (the same one they gave to the Journal).

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Amazon already delivers packages in a number of cities in the United States, so this isn't a completely new area for the company. More packages that it can fit into the back of a van is just more money for them. But for the rest of the country, it relies on UPS, FedEx, the US Postal Service and smaller outfits like Lasership for "the last mile," or the delivery between a parcel's final stop and the home. Last year, Gizmodo reported on Amazon's trouble with this part of the delivery and the incredible stresses it placed on workers.

This isn't the only Amazon delivery news this week. Earlier, Amazon announced it will be making Whole Foods deliveries (which it acquired in July) within a 2-hour window to Amazon Prime members. Having a distribution network in place could make it easier and cheaper for both businesses to get packages to their final destination.

It's hard to know how this will affect UPS and FedEx, though the latter suggested Amazon was no more than 3 percent of its business by revenue in a recent earnings call. Neither company commented beyond that during their calls.

As for you, Amazon charging less for shipping will mean less out of your pocket (unless you're already a Prime member, in which case you get free two-day shipping anyway), but we don't yet know whether UPS or FedEx will be able to lower their own prices or be forced to charge more.