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Amazon is reportedly testing its own delivery service

  • The company has been testing the new service in India for two years, the report said, adding it was deployed in West Coast states on a trial basis earlier this year.
  • The report also said Amazon is calling the project "Seller Flex" and that it plans a broader rollout in 2018.
An employee stacks items to be shipped at the Amazon fulfillment center in Phoenix.
David Paul Morris | Bloomberg | Getty Images
An employee stacks items to be shipped at the Amazon fulfillment center in Phoenix.

Online retail giant Amazon.com is reportedly experimenting with a new delivery service.

Bloomberg reported, citing two people familiar with the matter, that Amazon's new service would be aimed at making more items available for free two-day shipping. It would also relieve overcrowding in the company's warehouses.

The news sent shares of UPS lower, with the stock dropping 0.7 percent. FedEx's stock dropped before closing 0.1 percent higher.

Amazon has been testing the new service in India for two years, Bloomberg said, adding it was deployed in West Coast states on a trial basis earlier this year. The report also said Amazon is calling the project "Seller Flex" and that it plans a broader rollout in 2018.

With this project, Amazon would directly take over functions typically handled by UPS and FedEx, Bloomberg said.

Shares of Amazon rose 1.6 percent.

UPS told CNBC in a statement:

"Amazon is a valued UPS customer. We support all our customers with industry-leading ecommerce solutions and expect to expand these relationships further in the future."

Patrick Fitzgerald, senior vice president of integrated marketing and communications at FedEx, said:

"We don't comment on speculative news stories but there continues to be reporting related to our networks and the transportation industry that demonstrates a clear misunderstanding of the scale, infrastructure and complexity involved in running a global transportation network. FedEx and other transportation providers are innovating as it relates to new services for e-commerce residential deliveries, but that is only one piece of the capabilities that we provide. Demand for our global portfolio continues to grow."

Amazon did not immediately respond to CNBC's requests for comment.

Click here to read Bloomberg's full report.