Amazon plans to acquire remaining stake in shipping company Colis Privé

The acquisition represents Amazon’s biggest step into commercial package delivery and could mean the company is gearing up to take on the delivery heavyweights.

Analysts have predicted that online retailer Amazon is building its own shipping company that could be in line to bypass freight forwarding giants such as UPS and FedEx, according to USA Today.

Amazon has become a household name due to the dominance of its colossal online store.

The Seattle company plans to complete its acquisition of a French parcel delivery company, Colis Privé, within the next three months, the Seattle Times reports. Amazon now has a 25 percent stake in the organization.

Although Amazon’s shipping and delivery processes have increased in efficiency since then, the company’s shipping costs have increase by approximately 30 percent each of the past two years. This past holiday season, FedEx failed to deliver some Christmas packages on time, blaming inclement weather and a surge in last-minute holiday shopping.

Fortune magazine said that Amazon spent more than $8.7 billion on shipping in 2014, up from $6.6 billion in 2013.

Colis Privé won’t be closing down to only operate Amazon shipments, though.

Following the acquisition, Colis Privé will continue to accept shipments from other customers, while Amazon officials told the French newspaper Le Figaro that the deal “doesn’t call into question our work with all the other logistics providers” such as UPS and FedEx. Colin Sebastian, an analyst for Robert W. Baird & Co. said he believes Amazon is developing a delivery service that meets more than its own shipping needs, because the global fulfillment market, which includes shipping and warehousing, is a US$400 to US$450 billion business. Amazon made its cloud computing subsidiary, AWS, its own business, welcoming competitors such as Nordstrom and Netflix.

Amazon plows those profits back into its other businesses, keeping prices low on the retail site and investing in new markets as well. To succeed, Amazon would have to compete with companies that have always been its closest partners.

“Effectively what they’re doing is creating a carrier”, he said. The company will likely have to move somewhat carefully to ensure that its activity in this space can match or better the delivery prowess and customer service reputations of the likes of UPS and FedEx.