|Fri May 4 2012 14:59:14|
What Do Amazon's New FCs Mean for Sellers?
By: Ina Steiner
Amazon will build two fulfillment centers in California according to real estate developers. Hillwood and Clarion Partners announce a joint venture to develop a 950,000 square-foot fulfillment center for Amazon in San Bernardino, and USAA Real Estate Company announced it would develop a one-million square-foot fulfillment center for Amazon in Patterson.
Amazon's logistics network is giving it an immense competitive advantage. Amazon had already announced it was building 13 new FCs this year, this week's news makes it 15. It even owns the company that make the robots that automate warehouse operations.
As Amazon gets closer to the customer and closer to same-day delivery, it puts increasing pressure on non-FBA sellers and other retailers.
Previously new fulfillment centers would have been greeted as good news by regional sellers using Fulfillment By Amazon, since centers closer to them meant lower costs to ship their items. But now that Amazon FBA has moved to a split-shipment policy, more centers means a greater chance of having to send inventory farther away and possibly break up shipments when sending it to Amazon warehouses.
Large retailers and brands are fighting back against Amazon's shipping program with one of its own called ShopRunner, a membership program similar to Amazon Prime. ShopRunner also recently acquired a company that offers online shoppers the ability to get their orders delivered to retail stores where they can pick them up at their convenience.
Google is also trying to get into the space, so it's hard to understand why eBay gave away majority control of ShopRunner when it acquired its parent company GSI Commerce.
As Amazon gets better at delivering orders quickly, eBay will continue to pressure its sellers to offer quick delivery, but with no infrastructure, it's eBay sellers who will have to pick up the cost of expedited shipment.
Unless you offer customers a unique value proposition, why would they buy from you if they can get the same item faster on Amazon? As Amazon continues to build out its fulfillment capabilities, it will become an increasingly important question for merchants to ask themselves.