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Amazon Turns to Merchants for More Warehouse Space

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Amazon logoAmazon is working on a way to increase its warehouse capacity with zero capital expenditure. How is that possible? Turn its sellers’ warehouses into FBA fulfillment centers. It has already invited a small percentage of sellers into the program, called Amazon FBA Onsite.

Amazon already allows sellers to participate in Prime without having to send their items to FBA warehouses through “Seller Fulfilled Prime.” FBA Onsite takes SFP to a new level in which Amazon takes over the logistics.

Amazon told invited sellers, “Your inventory remains in your facility and orders are fulfilled through Amazon’s transportation network.” According to sellers, Amazon employees set up a merchant’s warehouse to be an extension of an Amazon fulfillment center – including installing an instance of their Warehouse Management Systems software on the merchant’s servers.

One compared it to Amazon “deputizing” the warehouse.

Some are wondering if the next step would be to open merchant FBA Onsite warehouses to other sellers’ inventory. That would be along the same lines as its Amazon Flex program that uses gig workers to deliver packages on an as-needed basis without having to hire employees.

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In some ways it is similar to Amazon Web Services (AWS) – once Amazon has its software set up to use multiple fulfillment centers (or servers), it can keep adding them. Whether Amazon owns, leases, or “gigs out” a warehouse doesn’t matter to the software that coordinates the logistics.

Amazon listed some advantages of the program in its invitation to sellers:

– A Nationwide, 2-day Prime offer for a flat fulfillment rate

– Fast and easy set-up with Amazon’s FBA Onsite WMS

– Immediate, no-cost inventory receipt and removal

– Integration with previously FBA-only programs like Subscribe and Save and Small and Light

– Simplified returns

– Prime offers for Hazmat inventory

– Flexible same-day shipping SLA

Sellers seem very receptive to the idea since gives them the same advantages of Seller Fulfilled Prime with more cost savings.

We just wrote about another new program in which Amazon is working to make its FBA program more efficient: With Amazon Supply Chain Connect, FBA sellers can choose to have suppliers send their inventory directly to Amazon using a portal to communicate directly with Amazon about shipments while keeping the merchant in the loop.

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Ina Steiner
Ina Steiner
Ina Steiner is co-founder and Editor of EcommerceBytes and has been reporting on ecommerce since 1999. She's a widely cited authority on marketplace selling and is author of "Turn eBay Data Into Dollars" (McGraw-Hill 2006). Her blog was featured in the book, "Blogging Heroes" (Wiley 2008). Follow her on Twitter at @ecommercebytes and send news tips to ina@ecommercebytes.com.