Ama­zon cuts de­liv­ery time to beat its ri­vals

China Daily (USA) - - FOCUS | BUSINESS - By BLOOMBERG and CHI­NADAILY

As the Chi­nese e-com­merce lo­gis­tics firm backed by Alibaba Group Hold­ing Ltd seeks to ex­pand de­spite losses, the lat­ter’s global ri­val, Ama­zon.com Inc, is fo­cus­ing on im­prov­ing its own dis­tri­bu­tion op­er­a­tions in the United States.

Ama­zo­nis speed­ing the de­liv­ery of USB ca­bles, smart­phone screen pro­tec­tors, cos­met­ics and other small, flat items in its con­tin­u­ing push against ri­val on­line mar­ket­places such as Alibaba that help over­seas man­u­fac­tur­ers and sup­pli­ers sell di­rectly to US shop­pers.

The Seat­tle-based e-com­merce giant no­ti­fied its mer­chants ear­lier this month that such items would now be de­liv­ered to Ama­zon Prime mem­bers within five busi­ness days, down from eight pre­vi­ously, ac­cord­ing to an email ob­tained by Bloomberg.

That makes Ama­zon de­liv­ery of small, in­ex­pen­sive items from China, for ex­am­ple, much faster than the two weeks to 30 days it can take us­ing on­line mar­ket­places owned by Alibaba Group Hold­ing Ltd, EBay Inc and Wish.com.

Ama­zon wants quick de­liv­ery, which has helped it dom­i­nate on­line shop­ping in the US, to fur­ther dif­fer­en­ti­ate it­self from com­peti­tors in cross-border ecom­merce.

US on­line shop­pers will spend about $30 bil­lion this year on cross-border trans­ac­tions, a 10 per­cent in­crease from 2015, with China the lead­ing source of goods pur­chased, ac­cord­ing to a Fe­bru­ary re­port by EMar­keter. An Ama­zon spokesman de­clined to com­ment on the de­liv­ery changes.

The boost-lo­gis­tics move comes two months after Ama­zon slashed ship­ping fees it charges mer­chants who sell items through a com­pany’s spe­cial pro­gram.

“I ex­pect the small and light pro­gram to ex­plode in vol­ume,” said Neil Ack­er­man, a former Ama­zon ex­ec­u­tive who started the pro­gram and now heads e-com­merce ini­tia­tives at Mon delez In­ter­na­tional. “Wish.com and other mar­ket­place swon’ t be able to com­pete with Ama­zon when it comes to speed or cus­tomer ser­vice.”

Ama­zon con­tin­ues to re­fine the small and light de­liv­ery sys­tem to blunt com­pe­ti­tion from ri­val mar­ket­places that help Chi­nese mer­chants ship di­rectly to US shop­pers through the ePacket pro­gram. EPacket is an agree­ment be­tween the US Postal Ser­vice and China Post that pro­vides Chi­nese mer­chants cheap ac­cess to US shop­pers on small pack­ages weigh­ing as much as 1.7 kg.

time taken by Ama­zon now to de­liver small, in­ex­pen­sive items from China to the US mar­ket, com­pared with 14 to 30 days taken by Alibaba and eBay

Chi­nese mer­chants sell­ing on Ama­zon can ship or­ders through ePacket, mean­ing Ama­zon gets less money than if it had han­dled pack­ing and de­liv­ery, and those sales take longer to reach cus­tomers.

Ama­zon pitches its quick de­liv­ery and prox­im­ity to US shop­pers to en­cour­age Chi­nese man­u­fac­tur­ers and sup­pli­ers to ship the items di­rectly to the com­pany’s ware­houses. An­other in­cen­tive is to make the prod­ucts Prime-el­i­gi­ble, which lets them reach Ama­zon’s most loyal shop­pers who pay $99 a year for de­liv­ery dis­counts.

By re­duc­ing the price of ship­ping such items and speed­ing their de­liv­ery, Ama­zon is look­ing to win both mer­chants sell­ing the items and cus­tomers who want them quickly.

Ama­zon shop­pers in the US or­der tens of mil­lions of units an­nu­ally that fit the small and light di­men­sions, ac­cord­ing to com­pany doc­u­ments re­viewed by Bloomberg News.

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