Jeff Daniels | CNBC | June 23rd, 2017

Amazon may want to dive into food service distribution, potentially shaking up an industry now dominated by three large players, according to a report.

“The risk has increased that AMZN becomes a disruptor to food service distribution models,” said JPMorgan analyst John Ivankoe in a research note published Friday. It said Amazon could do it through building its own operation or through an acquisition of an existing player in the industry.

The report is sparking a sell-off in food service distribution stocks as some investors worry Amazon’s entry would squeeze profit margins in an industry already known for stiff competition and tight margins. And it comes just a week after Amazon announced plans to pay $13.7 billion for Whole Foods, the major organic and natural foods grocery chain.

In trading, Sysco stock ended down 5.4 percent, US Foods fell 3.4 percent and Performance Food Group dropped 1.7 percent. Amazon shares rose fractionally.

On Friday, JPMorgan also removed Sysco stock from the firm’s focus list, citing added risk within the space. JPMorgan pointed out that since the Amazon-Whole Foods deal was announced, Sysco and US Foods shares have been under pressure.

Sysco and US Foods declined to comment. CNBC also reached out to Performance Food Group and Amazon but didn’t hear back at deadline.