Investing.com – Amazon moved closer toward to taking on delivery behemoths FedEx and UPS after unveiling a new drone that will test deliveries of toothpaste and household goods in the months to come.
Weighing as much as five pounds, the drone would be able to travel 15 minutes to deliver packages and avoid obstacles such as people, dogs and clotheslines, Amazon.com (NASDAQ:AMZN) said. Its shares rose 0.45%
The update has been long in the making after the company in December 2016 ran a trial run in the U.K., delivering a package by drone in 13 minutes.
The company also addressed concerns around the safety of the drones to avoid coming into contact with obstacles such as people.
"If our drone’s flight environment changes, or the drone‘s mission commands it to come into contact with an object that wasn’t there previously - it will refuse to do so - it is independently safe,” said Amazon executive Jeff Wilke.
Amazon's move to create its own delivery network comes as the proliferation of e-commerce has, at peak times, overloaded the capacity of its delivery partners.
For the moment, Amazon's foray into the shipping industry will take some time, with many expecting Amazon to continue building more capacity, reducing its reliance on its delivery partners such as FedEx and UPS. But eventually the "Amazonification" of shipping industry will threaten the growth of its partners, analysts warned.
Morgan Stanley (NYSE:MS) said late last year that it believes the market is missing the risk Amazon Air (its in-house Express Air network) poses to UPS and FedDex growth.
FedEx (NYSE:FDX) ended the day down 0.6%, while United Parcel Service (NYSE:UPS) rose 0.6%.