Seller Flex, which is in trials in the USA and has been operational in India for two years, would allow the retailer to save money, free up space at distribution centers and provide more products via free two-day delivery.
Amazon is calling the project Seller Flex and plans to began on a trial basis this year in West Coast states with a broader rollout planned in 2018. Amazon previously tested it in India for two years.
As part of the service, Amazon will oversee the pickup of packages from warehouses of third-party merchants and the delivery of those packages to consumers, the report said.
The hit to delivery service companies' stocks on fears that Amazon will disrupt the industry might have some staying power, CNBC's Jim Cramer said Thursday.
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When asked whether UPS and FedEx investors should be concerned about Amazon entering the market, Cramer said "yes".
FedEx spokesman Jess Bunn told CNNMoney that the company had no specific comment about the Amazon reports, but he added that "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".
The decision to more actively manage its inventory could stem from a surge of last-minute holiday orders in 2013 when Amazon was unable to fulfill its two-day shipping guarantee, Bloomberg also noted. Rather than relying on the delivery services, Amazon will pick up products from vendors and deliver them to customers.
Amazon has always been experimenting with making deliveries faster.
Amazon accounts for 5 percent to 10 percent of UPS revenue, according to analyst estimates, while FedEx has said the e-commerce giant accounts for less than 3 percent of its sales.
It launched Amazon Flex, which uses independent contractors driving their own vehicles to deliver packages from Amazon shipping hubs, guided by a smartphone app. Sometimes merchants selling through Amazon's platform can offer a lower price for new, and more often used versions of those products.