Shipping with Amazon
Amazon is creating its own shipping company specifically for its third-party sellers. “Shipping with Amazon” is expected to launch soon and should provide tremendous relief to sellers and buyers everywhere.
Amazon Taking On UPS and FedEx for FBA Amazon Sellers
Amazon’s plan seems to include taking UPS and FedEx out of Amazon’s shipping equation by shipping Amazon third-party sellers’ products to customers itself.
The move makes sense for Amazon financially, who rapidly has had to spend more money on shipping than they have in years past. Business Insider reports that the Seattle-based company has had to spend a larger percentage of its money on shipping as its customer base has grown. The percentage has gone up every year since 2006.
This isn’t the first time Amazon has worked to improve its shipping in recent years. E-Commerce Times notes that the company has taken other steps in the past to address these issues as well.
Amazon has relied on third-party shippers for many years, but those firms have tended to become overwhelmed and backlogged during the critical Christmas holiday delivery season.
To address the shipping challenges, Amazon has experimented with drone deliveries. It also created a service called “Deliver With Amazon,” which lets local delivery services partner with Amazon to get packages to local customers. It has expanded its network of warehouses and fulfillment centers to locate merchandise closer to customers. Amazon also acquired a fleet of freight aircraft for its Prime Air business and built a US$1.5 billion hub in Kentucky.
However, this is certainly the biggest change Amazon has made to date with regards to its shipping.
Amazon and New Shipping Options by Christmas 2018 for Itself and 3P Sellers
“Shipping with Amazon” should be in full swing by the time the 2018 holiday season comes around. The program is expected to first launch in Los Angeles within the next few weeks as a test run before potentially expanding to other regions. Once Amazon sees how it stacks up with its competition, the company can determine whether to give the service a shot elsewhere. Amazon will even consider expanding its service to non-Amazon sellers down the line.
So, how could Amazon’s new shipping services impact third party sellers and their businesses?
Amazon Shipping’s Benefits to Third Party Sellers
Simply put, Amazon may do a better job of shipping Amazon Sellers’ goods to consumers. Historically, Amazon has succeeded in increasing quality and lowering prices in many areas. The benefits, if they are realized, should inure to Amazon Sellers.
Additionally, Amazon is planning to make shipping cheaper through “Shipping with Amazon.” Customers won’t have to spend as much if they choose Amazon’s shipping option, which will mean more business for sellers as well.
Axios praised Amazon for the move.
Amazon provides a master class on building a virtuous cycle, continuing to lower its costs as more third parties ship with Amazon. Those savings could then be reinvested into lower prices for Amazon’s consumers, ultimately extending its reach over the competitors who use its DAAS service.
Amazon Shipping’s Detriments to Suspended Amazon Sellers
If Amazon is the shipping company, Amazon 3P Sellers may face a major problem. Often, Amazon Sellers are suspended because of problems with shipping. The products arrive late or damaged. The customer complains and the 3p Seller is suspended. Amazon Sellers often argue in their Plans of Action that the root cause of their suspension was the shipping. Suspended Amazon Sellers often tell Amazon in their Plans of Action that they will address the root cause of the suspension and improve themselves by using a different shipping company.
Suspended Amazon Sellers that use Amazon shipping who would have blamed the shipping company will be faced with blaming Amazon itself…..which has not been a very successful argument in the past when an Amazon seller is suspended.
Shipping with Amazon Causing Loss of Well Paying Jobs
FedEx and UPS might be trouble after this move. Layoffs could occur for well paid UPS and Fedex employees. Amazon is the biggest retail company on the planet, and much of FedEx and UPS’ business comes from online shopping. If the biggest sales giant isn’t going to be using those two companies’ services anymore, UPS and Fedex could face significant losses.
This article was researched and written by Anders Jorstad. Anders is a content creator for Rosenbaum Famularo, P.C., the law firm behind AmazonSellersLawyer.com. Anders will be earning his degree in journalism from Hofstra and has 5 years of professional journalism experience. He has written for numerous online and print publications including SB Nation and The Hofstra Chronicle.