Amazon uses Buy with Prime to step into third-party distribution waters

About six years after it was created, Inc. has opened the door to distribution to other online stores, which may not be what you originally expected. Over time, you’ll see how far Amazon can go about this.

This service, called Buy with Prime, enables selected merchant groups to offer the benefits of Amazon’s ubiquitous Prime service, including shipping, through their online stores. This service is currently available to merchants who are already using Amazon’s fulfillment and shipping services. However, Amazon (NASDAQ: AMZN) The invitation list will be expanded throughout the year to include sellers who do not use the fulfillment service and companies that do not sell on the platform.

This is the last part some people get as evidence that Amazon will eventually launch a delivery service for companies that aren’t using retail or fulfillment offerings after five years of speculation. .. This is where Amazon CFO Brian Olsavsky may be asked to comment on Thursday afternoon, when Amazon hosts analysts, following the announcement of the first quarter results.

Theoretically, this move would cause Amazon to compete directly with UPS Inc. (NYSE: UPS), It counts Amazon as the largest delivery customer. It will strengthen the rivalry with FedEx Corp. (NYSE: FDX), I haven’t had a relationship with Amazon for nearly three years. Also, once a major Amazon vendor, Amazon’s more in-house delivery business in recent years has moved Amazon further away from the United States Postal Service.

The announcement last Thursday was a step for the baby. Amazon seems to be testing shallows to measure the merchant’s reaction to the program. It does not offer pickups except in very rare circumstances and is not considered a genuine integrated carrier in molds for FedEx, UPS, and postal services. UPS, which generated 11.7% of the 2021 revenue from Amazon of $ 94 billion, does not seem to be worried about intrusion. UPS CEO Carol B. Tome called the program “very clever marketing play” by Amazon on Wednesday. However, UPS’s competitiveness is not threatened by allowing Amazon to offer prime services to other merchants, she said.

UPS and Amazon have reached an agreement that Tomé calls a “mutually beneficial” agreement. This allows Amazon to effectively handle packages for which UPS is not interested in delivery.

Dean Maciuba, US Managing Partner at Crossroads Parcel Consulting, said the program would have some impact on other parcel carriers as merchants who had self-fulfilled orders in their careers would switch fulfillment to Amazon if they agreed to join. Said to give. But Amazon “doesn’t yet have the ability to act as an integrated carrier and compete directly with third-party businesses,” which has nothing to do with e-commerce, “Mashiuba said.

Trever Outman, founder and co-CEO of consultancy Shipware LLC, sees it differently. By “stepping into the shallow waters of the highly competitive ocean” with limited deployment, Amazon can test the fulfillment and delivery performance of unlisted orders, Outman said in a LinkedIn post earlier this week. ..

According to Outman, the controlled launch is the “first half” of the game where Amazon measures retailer and consumer demand, creates billing and pricing models, and builds final mile delivery densities. If you clear these checkboxes, Amazon will open a program to select an outside retailer, Outman said.

Amazon was working on the program until the Covid-19 pandemic put it on hold. In fact, Outman said there were eight major sort centers nationwide to serve non-Amazon accounts. “It’s not easy to suggest that major retailers with high collection densities in these areas are currently discussing and planning with Amazon,” Outman said in a post.

“We’ve all seen playbooks from Amazon before,” Outman said. “They are orderly, follow the data, and play for maintenance.”

The FREIGHTWAVES TOP 500 The For-Hire Carriers list includes: FedEx (No.1) and UPS (No. 2).

Register now for the future of your supply chain # FOSC22

The main voice of the supply chain will come to Rogers, Arkansas from May 9th to 10th.

* Limited time pricing is available. Amazon uses Buy with Prime to step into third-party distribution waters

Back to top button