Should FedEx And UPS Fear Amazon’s New SWA Shipping Service?

One day after unveiling the Whole Foods grocery delivery Prime Now service, Amazon is reportedly making an even bigger shipping splash. The e-Commerce giant is preparing to launch Shipping with Amazon or “SWA,” a package delivery service for businesses that could cut into business at companies like FedEx and UPS, according to The Wall Street Journal.

SWA is designed to pick up packages from businesses and ship them to consumers, putting Amazon in direct competition with delivery partners FedEx and UPS.

While Amazon’s shipping and fulfillment costs would increase dramatically in the short-term as it builds up a delivery system, the company could save as much as $1.1 billion annually if it stopped using UPS and FedEx altogether, according to Citigroup analysts.

“Amazon is growing at roughly 25% per year, while UPS/FedEx capacity typically grows at 8% per year, so clearly Amazon needs to increase delivery capacity to support its own growth,” saidJason Goldberg, Senior VP of Commerce and Content at SapientRazorfish told Retail TouchPoints. “As UPS and FedEx capacity gets more constrained, they raise their rates, and as a result, shipping costs have become…