Amazon is expected to acquire French shipping company Colis Privé, as part of a plan to take on FedEx and UPS, according to The Seattle Times.
The e-commerce giant already owns 25% of the French company through an investment in 2014. But now Amazon wants to acquire the remaining 75%.
According to the report, Colis Privé will continue to ship packages on behalf of all e-commerce customers after the acquisition. The deal would close in the first quarter.
But the acquisition’s broader implications would be Amazon going head-to-head with FedEx, DHL, and UPS in France. It would be part of a bigger move by Amazon to own and manage shipping and distribution services instead of relying on others.
Amazon currently relies on UPS, the USPS and FedEx to deliver packages to customers’ doorsteps. But with the company’s expected delivery drones and even its own fleet of trucks, Amazon is slowly taking over these operations and relying less on the multinational shipping giants.
The e-commerce giant is also reportedly negotiating to lease 20 Boeing 767 jets to transport products and get them to customer homes more quickly.
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For Amazon, the benefit of owning the shipping network could be significant for its bottom line amid soaring shipping costs. The company spent over $8.7 billion on shipping in 2014, up from $6.6 billion in 2013. Creating an in-house logistics service could help lower those costs. Similar to the way in which Amazon made its cloud computing arm AWS a business, Amazon could also decide to handle shipping for other companies.
Colin Sebastian, an analyst with Baird Equity Research, is bullish on Amazon’s plans. “We believe Amazon has an advantage in the market by managing the logistics of its own core revenue-generating business, then extending that capacity as a service to other companies,” Sebastian wrote in a note Monday. “Moreover, given the scale of Amazon’s own first and third-party retail operations, we believe there are potential efficiency gains from internally operating fulfillment, logistics and delivery, as well as service benefits of controlling the full customer experience.”
But don’t expect a full-fledged Amazon shipping business anytime soon. Sebastian writes that Amazon will likely slowly roll out portions of a logistics business. It would use the acquisition of Colis Privé to get “greater domain expertise and scale in logistics services,” he said.