Amazon takes on FedEx and UPS!
Amazon announced on Friday it's back in the shipping game and competing head-to-head with FedEx and UPS.
Backstory
Initially tested pre-pandemic, the service was paused in 2020. Why? To manage the surge in online shopping on Amazon's platform during COVID-19.
Amazon Shipping Relaunches
Sellers can ship Amazon orders or products sold elsewhere. The catch? Businesses must sell on Amazon to be eligible.
What’s Special?
Unlike Fulfilment by Amazon (FBA), sellers use Amazon’s delivery network without storing products in Amazon's warehouses. It only applies to domestic shipments.
Amazon's Logistics Power Moves
Through the pandemic, Amazon massively expanded its logistics to manage order influx. Post-pandemic? They had excess warehouse space, which they managed by subleasing and deferring new constructions.
Speed is Key
Q2 this year saw over half of Prime orders in the top 60 US metros delivered within 24 hours. Amazon calls it the fastest Prime speed ever. On the horizon? Plans to double the number of same-day delivery sites.
The news came days after reports that Amazon was preparing to impose a new fee on third-party merchants who don’t use its logistics services. Beginning in October, sellers who handle their own shipping will pay a 2% fee on each sale, on top of the commission they already pay to sell products on Amazon’s platform.
“Seller Fulfilled Prime is a voluntary, optional program that enables sellers who independently handle the fulfilment of their products to have their offers receive the Prime badge,” an Amazon spokesperson
CEO Andy Jassy said during the company’s most recent earnings call that progress is being made to transition Amazon stores’ fulfilment and transportation network from a national network in the U.S. to a eight separate regions serving smaller geographic areas.
“Regionalization is working and has delivered a 20% reduction in number of touches for our delivered package, a 19% reduction in miles travelled to deliver packages to customers, and more than a 1,000-basis-point increase in deliveries fulfilled within region,” Jassy said.
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