Ina Steiner EcommerceBytes Blog
News and insight focusing on ecommerce.
by Ina Steiner, Editor of EcommerceBytes.com
Fri May 4 2012 14:59:14

What Do Amazon's New FCs Mean for Sellers?

By: Ina Steiner

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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.

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This user has validated their user name. by: Anonymous Annie

Fri May 4 15:43:07 2012

Ina writes: ''...so it's hard to understand why eBay gave away majority control of ShopRunner when it acquired its parent company...''

Such boneheaded moves can only be accurately explained when someone includes words like ''arrogance'' and ''myopic''... as well as phrases including ''wearing blinders'' and ''obsessive compulsive''. And then there's the psychological paralyzing fear that some develop when other ''big bold'' decisions in the past have turned out to be colossal failures. Even the lukewarm and tepid successes often appear as failures when careful observers spot the smoke-and-mirrors needed to create the illusion of success... and when compared with all the fanfare and buzz generated by the initial announcements.

Perhaps fear of another failure kept them from pursuing this. And then... there's the final possibility of having ''too-many-irons-in-the-fire'' and having too many resources (both human and capital) tied up with other projects.

It could be that someone at eBay did have an inkling of its value and potential, but they didn't have the resources, stamina or vision to see it through.

Ultimately, eBay will be playing catch-up instead of becoming a leader. A pretender, instead of a player. ''Me-too'' instead of ''look-at-me''.

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This user has validated their user name. by: Ed Gadfly

Fri May 4 17:11:05 2012

Yea! More Amazon sweatshops!

One and two day shipping turn around is outrageous.

I buy from psychicsellers.com. They have the item wrapped and in the mail before I even realize I want it.

Forget ''You asked and we listened.''

With psychicsellers.com, ''They know it before you realize it!''

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by: fvh This user has validated their user name.

Fri May 4 17:31:28 2012

@Gadfly, Tell me you have a blog or something. You really know how to make me laugh!

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by: pace306 This user has validated their user name.

Fri May 4 18:38:53 2012

Wrong! eBay already bought 2 warehouses, fulfillment by eBay is comming!

Thing is ...... It's not for you OR me. It's for the GSI Commerce clan!

Shhhhh eBay WAS gonna do a Buy on line/pick up at the store with Best Buy but Dunn (Ex CEO) left his position before that deal went down. Can you imagine the fvfs eBay would have gotten!!!

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This user has validated their user name. by: Ric

Fri May 4 21:59:29 2012

    "... it's hard to understand why eBay gave away majority control of ShopRunner when it acquired its parent company GSI Commerce."

The answer is simple, eBay's CEO has no vision... the man can not see his hand in front of his face.

His lack of vision explains how the ecommerce company has developed what amounts to a singularly antagonistic attitude towards it's sellers which is driving increasing numbers out of eBay's marketplace.

The resulting decline in SKU diversity at eBay is generating yawns with buyers which explains why eBay's CEO has to resort to parlor game tricks in order to fudge the GMV numbers.

When Wall Street wakes up to the smoke and mirrors, sees the reality of the destructive inclinations of John Donahoe, and begins to insist on genuine transactional growth from eBay's marketplace, all the kings horses and all the kings men will not be able to put JD back together again.



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