Amazon is getting ready to launch its own delivery service, named “Shipping with Amazon” (SWA), which will rival UPS and FedEx, according to The Wall Street Journal.
The service will see Amazon handle delivery for other businesses, and will start in Los Angeles, where it will work with third-party merchants that sell on Amazon’s marketplace. There are plans to expand to other cities and businesses in the near future, sources told WSJ.
Shipping with Amazon aims to offer lower prices than competitors by adding these deliveries to trucks handling Amazon’s own orders. Amazon reportedly plans on offering lower prices than FedEx and UPS in order to attract businesses to SWA. To do this, Amazon will use empty space in its own trucks, which will be delivering its own orders, to take on other businesses’ orders without adding much cost. If it's successful, lower rates would likely be a compelling sell for businesses to use SWA.
Amazon has been taking more control of its logistics network through Fulfillment by Amazon (FBA) initiatives, but SWA would give it nearly full control over its orders.Previously, Amazon has offered its third-party sellers warehouse management software and fulfillment help to both aid merchants and have more power over its logistics. And, while SWA likely won't be mandatory for its vendors, those that do participate will be helping Amazon greatly. Amazon will be able to coordinate significantly more of its fulfillment operations, as it'll have control of deliveries from the time they leave merchants’ warehouses to the moment they reach consumers’ doorsteps. This can enable faster and more efficient delivery for Amazon, so it's likely to heavily recruit its third-party sellers to SWA.
Widespread use of SWA might help Amazon build out Prime’s offerings further.Programs like Seller Fulfilled Prime and FBA Onsite made it easier for third-party merchants to have their products qualify for Prime without first sending products to Amazon’s warehouses, and SWA could help it go a step farther.
SWA may enable Amazon to offer Prime shipping for any products from a business that uses SWA, as Amazon will have much more control over their fulfillment. This would be a boon to Amazon, as offering more Prime-eligible products makes a Prime subscription more valuable because it gives subscribers, Amazon's most important consumers, more options, which could lead to additional purchases.
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