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Amazon may have a secret mission to take on UPS and Fedex

By Ed Oswald February 10, 2016

Julie Clopper/Shutterstock

Amazon Boxes — Julie Clopper/Shutterstock

Amazon certainly made waves with the launch of Prime, which now offers customers two-day shipping and a host of other features in return for a yearly membership fee. But is Amazon’s biggest game changer yet to come?

Bloomberg reports that it has obtained Amazon documents that indicate the company is planning an aggressive expansion of its “Fulfillment by Amazon” service. This would turn a service that has been aimed at helping businesses get their products into the hands of their customers into a UPS or FedEx of sorts.

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Dubbed “Dragon Boat,” the service appears to work with manufacturers in China and India, managing the flow of products from these companies directly to consumers’ homes. The documents mention Atlanta, New York, and London as cities Amazon intends to initially serve, indicating the company plans to start (relatively) small.

Related: Try Amazon Prime Free for 30 Days

Dragon Boat is already in development, Bloomberg says, and the company is already getting infrastructure in place. Amazon itself is trying to downplay its ambitions: company officials say any system is just a “supplement” to its delivery partners during busy periods, like the holiday shopping season.

Meeting shipment targets has been a real problem for UPS and FedEx over the past few years. Both of these delivery giants underestimated the number of packages that actually ended up in the system during the holidays in 2013, and in 2015 a larger surge combined with severe winter weather caused some FedEx packages to be delivered late, forcing Amazon to provide partial refunds.

That could be enough to spur Amazon to take control over the delivery process, but not in total early on.

The documents say that third-party carriers would still play a role in Dragon Boat in the initial stages. However, the ultimate goal is for the entire process, from logistics, to booking, and on to doorstep delivery, to be controlled by the online retailer. It’s a huge project for sure, so it’s likely going to be several years before Amazon gets to that point.

While the company might not be ready to directly confirm its ultimate ambitions, its actions speak for themselves. The firm’s Chinese subsidiary registered to become an ocean freight carrier in January, and Bloomberg reported in December that the company was considering leasing 20 Boeing 767’s to gain more control over the fulfillment process.

Amazon did not respond to any requests for further comment on this story.

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