Amazon.com (AMZN) Can't Replace UPS and FedEx, Recon Capital CIO Kelly Says - TheStreet

NEW YORK (TheStreet) -- Amazon.com (AMZN) - Get Report  is smart to develop its own shipping business that will make it a direct competitor to UPS (UPS) and FedEx (FDX), Talmage Advisors CEO Liz Dunn said on Fox Business' "Mornings with Maria Bartiromo" on Wednesday morning.

"It's a really impressive move, and I think one that's important for them," Dunn said. 

The e-commerce giant will focus on reliability, as it's a "core part of their offer," she said. 

Amazon.com could save $1.1 billion a year by not going through UPS and FedEx, according to Citigroup analysts, the Wall Street Journal reported on Tuesday. 

"It's the direct revenue but it's also the fact that they can bundle a lot of those deliveries from Amazon with other things they're delivering, so it could be a massive impact for [UPS and FedEx]," Dunn noted. 

It's likely that Amazon.com will eventually expand this shipping service to other retailers that would be receptive to it because they're also struggling with shipping costs and reliability, Dunn said. 

While it may compete with UPS and FedEx, Amazon.com will not replace them, claimed Recon Capital CIO Kevin Kelly.

"[UPS and FedEx] are both behemoths that constantly have to reinvest in their business and this is their core competency, especially with the supply chain management," Kelly said. 

Amazon.com is probably looking to "pick and choose" where to implement its delivery services, he said. 

This is in line with Amazon.com CEO Jeff Bezos' comments at Recode's third annual Code Conference in Rancho Palos Verdes, CA this past June. 

Bezos said that he was looking to start a delivery service that complemented FedEx, UPS and USPS, rather than replaced them, according to Bloomberg

"We will take all the capacity that the U.S. Postal Service can give us and that UPS can give us, and we still need to supplement it. So we're not cutting back. We're growing our business with UPS. We're growing our business with the U.S. Postal Service," Bezos said. 

Shares of Amazon.com were higher in early-afternoon trading on Wednesday. 

Separately, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author.

TheStreet Ratings team rates Amazon.com as a Buy with a ratings score of B-. COM INC (AMZN) a BUY. This is driven by a few notable strengths, which the team believes should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks the team covers.

You can view the full analysis from the report here: AMZN

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