Amazon Shipping is back, offering its Marketplace sellers an alternative to other major parcel carriers.
Supply Chain Digest Says...
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On the news from AP, Bloomberg reported that the fee has led to griping by many sellers, who worry the goal of the program is to pressure them into using Amazon’s logistics.
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As first reported by the Associates Press last Friday, Amazon was testing the service four years ago, but scuttled the strategy in 2020, when the pandemic sent ecommerce volumes soaring, straining Amazon resources to handle its own volumes, let alone those of its third-party sellers.
But three years later, with ecommerce growth sagging, Amazon has revived the program, which will drive volumes and hence potential operational efficiencies into its delivery network.
Amazon Shipping is designed for its Marketplace sellers who have chosen not to use its Fulfillment by Amazon (FBA) service, which holds a supplier’s inventory and then manages the pick, pack and ship process as well as last mile fulfillment. For that shipping, Amazon uses own Delivery Service Partner (DSP) network but also other carriers such as UPS.
With Amazon Shipping, sellers still do their own order picking and packing, but handoff to Amazon for the parcel shipping.
Amazon spokesperson Olivia Connors told the Associated press that “We’re always working to develop new, innovative ways to support Amazon’s selling partners, and Amazon Shipping is another option for shipping packages to customers quickly and cost-effectively.”
Connors added that “We’ve been providing this service for a while with positive feedback so we’re now making it available to more selling partners.”
Interestingly, the Associated Press report came just a few days after Amazon announced it would start imposing a fee of 2% of the sale value for each order placed on its Marketplace site if the seller does not use FBA. That of course is in addition to the existing commission fees sellers must pay for using the platform.
Sellers will face the new 2% fee starting in October.
On the news from AP, Bloomberg reported that the fee has led to griping by many sellers, who worry the goal of the program is to pressure them into using Amazon’s logistics, rather than fulfilling orders independently. Amazon contends that the fee is needed to cover the costs of maintaining a separate infrastructure and determine its effectiveness.
It is not clear whether using Amazon Shipping by itself is enough to eliminate the new shipping fee.
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Meanwhile, the stocks of Amazon Shipping rivals UPS and FedEx fell, apparently on the news. UPS was trading at about $170 per share on Friday, but fell to around $168.5 on Monday, a drop of 1.6% from its Friday close.
Shares in FedEx fell even more sharply, dropping 2.75% at Monday’s market close.
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