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Amazon Reportedly Testing Local Delivery from Merchant DCs

06 October 2017
Amazon Reportedly Testing Local Delivery from Merchant DCs

Amazon is testing a new delivery option for third-party sellers, which would increase Amazon's role in the logistics chain at the expense of UPS and FedEx, its long-time shipping partners. It seems that Amazon has found another industry to terrorize, and even though the drop seen at FedEx and UPS might appear to be marginal, it could hurt if Amazon can get its delivery service off the ground.

The goal of the program Amazon is reportedly experimenting with, which Bloomberg reports began in India two years ago and is being tested in western USA states, is to expand the breadth of items available under Amazon Prime. This service began on a trial basis on the West Coast earlier this year, expanding further in 2018. Amazon has already been using local couriers for same-day deliveries in major markets, and has been leaning more heavily on the U.S. Postal Service, including on Sundays. Under the plan, Amazon would pick up goods from the seller warehouses and deliver them to customers. Sellers who are approved must purchase shipping for all Prime items through Amazon's Buy Shipping Services. It also helps to solve overcrowding at warehouses that use the Fulfillment by Amazon program, where third-party sellers send items for Amazon to store while they wait for a buyer.

The decision to more actively manage its inventory could stem from a surge of last-minute holiday orders in 2013 when Amazon was unable to fulfill its two-day shipping guarantee, Bloomberg also noted.

However, the threat of Amazon turning the industry upside down had popped up periodically during conference calls held with analysts the past year for both FedEx and UPS. It did not indicate how the deliveries would be handled and by what type of service. "If Amazon does take a few customers, the whole e-commerce pie is growing so fast that FedEx and UPS won't miss a beat".

Amazon is constantly experimenting to shorten delivery times and reduce costs. It involves Amazon picking up products from third-party sellers and shipping them to customers, rather than having third-party sellers handle the entire shipping process themselves.