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Sat June 29 2019 00:26:02

Amazon Ready to Scale Its Shipping Service for Merchants

By: Ina Steiner

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Amazon Shipping launched in the UK in March of 2016 and is now building a team to scale the beta shipping program at pace, according to company job postings. 

With Amazon Shipping, Amazon acts as a carrier - it picks up orders from third-party merchants' warehouses and delivers them to customers, including orders generated through other channels besides Amazon. In the US, it started in LA and has expanded to Chicago. (You won't easily find information about the program, as it is still operating in stealth mode.)

Merchants who are participating in the beta program in the US can add Amazon Shipping Services directly through an API or to their third-party shipping software program, and it recently added integrations with ShipStation, ShipWorks, and ShippingEasy.

From a financial standpoint, it makes sense to scale a shipping network. When a plane or truck moves from point A to point B, it's optimal to have it full rather than half empty, and having a regular route from one city to another makes sense only if there's enough business to justify the expense, which helps explain why Amazon is looking outside of first-party orders and those it fulfills for FBA merchants. (The same reason FedEx was recently reported to have cut prices in order to fill its planes.)

This week, Axios reported on data provided by Rakuten Intelligence that indicated nearly half of Amazon packages are now delivered by the company itself, compared to 2 years ago when it fulfilled 15% and the USPS delivered over 60%. (Amazon told Axios its numbers were not accurate.)

The chart Axios published was dramatic and got lots of play on Twitter, such as a tweet from Cristina Berta Jones who wrote, "First FBA, then AWS, next up shipping: "Amazon will be able to ship products for about two-thirds the rates of UPS and FedEx. Its trucks and planes are out delivering Amazon packages anyway so it can offer shipping at cost, instead of collecting a margin."" (5:20 PM - 27 Jun 2019)

And this tweet by D.Eadward Tree pointed to the impact on the US Postal Service:

‏"If true, this analysis is stunning news for #USPS: In less than 2 years, its share of #Amazon packages has dropped from 60% to 33%. via @axios" (8:51 AM - 27 Jun 2019)

Interestingly, Axios quoted an expert in logistics who said Amazon only wants to take on the profitable routes and "leave the carriers with all the dogs."

Sellers who use Fulfillment by Amazon (FBA) may be in the position to judge the advisability of using Amazon Shipping (AWS) - would you trust your packages to Amazon?



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by: sasikat9 This user has validated their user name.

Sat Jun 29 06:08:58 2019

All of our packages in the past year have been delivered by a third party. Not the post office. As we have said for the past year the post office is the big loser. Even sunday of last week the delivery was made by a third party person. Maybe instead of rising postage rates every week the post office should re examine the costs for small sellers. Seems that they are fine with pennies on the dollars from the chinese. Oh wait its probably to late. Keep raising em.

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by: jimcooncat This user has validated their user name.

Sat Jun 29 12:47:13 2019

Really? "Axios quoted an expert in logistics who said Amazon only wants to take on the profitable routes and 'leave the carriers with all the dogs.'" Why wouldn't they want to do that? I know I would.

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by: Chicago48 This user has validated their user name.

Mon Jul 1 01:04:13 2019

I had been predicting that AMZ would enter the postal business.  They already have airplanes that compete against UPS.  They have drop off lockers for returns.  Why not go all out and pickup packages and deliver them?

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by: Moonwishes This user has validated their user name.
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Mon Jul 1 01:18:38 2019

Doubt it is anything I would have to worry about as my area would be considered one of the 'dogs'  as I live out in the country which is fine as I have a fantastic postal carrier and a fantastic PO!

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by: mamie14425 This user has validated their user name.

Mon Jul 1 15:08:55 2019

Have used USPS for 16 years without any problems....



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