Amazon tests own delivery service with merchants in US
Amazon is experimenting with a new delivery service intended to make more products available for free two-day delivery and relieve overcrowding in its warehouses, say two people familiar with the plan, which will push the online retailer deeper into functions handled by longtime partners United Parcel Service (UPS) and FedEx.
The service began two years ago in India and Amazon has been slowly marketing it to US merchants in preparation for a national expansion, said the people, who asked not to be identified because the US pilot project was confidential.
Amazon was calling the project Seller Flex, one person said. The service began on a trial basis in 2017 in West Coast states with a broader roll-out planned in 2018, the people said. Amazon declined to comment.
Amazon will oversee pickup of packages from warehouses of third-party merchants selling goods on Amazon.com and their delivery to customers’ homes, the people said — work that is now often handled by UPS and FedEx. Amazon could still use these couriers for delivery, but the company will decide how a package is sent instead of leaving it up to the seller.
Handling more deliveries itself would give Amazon greater control over the last mile to shoppers’ doorsteps, allow it to save money through volume discounts, and help avoid congestion in its own warehouses.
In 2016, Amazon introduced Seller Fulfilled Prime, which allows merchants who do not stow items in Amazon warehouses to still have their products listed with the Prime badge, meaning they will be delivered within two days.
The merchants had to demonstrate they could meet Amazon’s delivery pledge, and many used UPS and FedEx. The new service gives Amazon control over those deliveries instead, even if it continues to use third-party couriers.
Amazon has started looking beyond its own warehouse network to give shoppers quick access to an abundant assortment of goods. Its Fulfillment by Amazon offering already allows merchants to ship goods to Amazon warehouses around the US, where they can be stored, packed and shipped to customers. That centralised approach can create logjams, particularly during the busy holiday shopping season.
Seller Flex would also give Seattle-based Amazon more insight into the warehousing and delivery operations of its merchant partners, potentially helping it to make full use of their product inventory, storage space and proximity to customers while still guaranteeing quick delivery.