The metamorphosis of Amazon into an end-to-end logistics provider for online merchants has taken another step forward. Amazon is now offering its sellers a fully managed end-to-end logistics service through Supply Chain by Amazon.
According to the e-commerce giant, this is a complete package to move products from manufacturer to customer, using Amazon’s logistics, warehousing and transport networks, connecting Amazon Warehousing and Distribution with its fulfilment centres across the US.
Alongside the management of traffic through the various supply chain stages, the new service includes forecasting and optimisation tools.
Amazon claims sellers that are using the offering have reported an average increase in sales conversion of 20%, thanks to the accelerated delivery speeds. Rick Watson, founder and CEO of RMW Commerce Consulting, reckons the new offering will be popular with smaller merchants. “For smaller sellers already using FBA [Fulfilment By Amazon] the new offering could make a lot of sense,” he commented. “It is really the holy grail – how to optimise your supply chain automatically by someone with more capabilities and data than you.”
He finds the claim of a 20% increase in conversion numbers “difficult to stomach”, but added that the benefits were real. “This is exactly what I think Shopify had wanted to do with its logistics offering, but didn’t have the capital or expertise necessary to do it,” he said. “And Flexport isn’t going to be doing this either, not on Amazon scale, not even close. “So this offering will have no equal in the market, in terms of reach, rates and capabilities,” he added.
Flexport went through a difficult 2023, which caused an estimated 20% reduction in its workforce. In January it received a $260m infusion from Shopify, which strengthened its balance sheet. Early this month it upped its game in e-commerce fulfillment through an alliance with Veho, leveraging the tech company’s platform to expand next-day and two-day delivery capabilities. Through this it can now offer two-day service to 85% of US households, it claims.
Amazon is boosting its strength on the delivery side with a $2.1bn investment in its Delivery Service Partner programme that supports small business owners providing delivery services. The package, which was announced on 13 September, marks the biggest single injection into the programme, bringing Amazon’s total investment in it to $12.3bn since its inception in 2018.
Meanwhile, the other US retail giants are also beefing up their logistics capabilities. Last month, Target opened a fulfilment centre in Detroit to handle up to 60,000 packages a day, a move aimed at strengthening next-day deliveries.
Walmart too has been increasingly active rolling out services aimed at third-party sellers to use its supply chain network. In mid-August it offered its ocean shipping service from China to the US to sellers using its Walmart Marketplace, a platform for third-party sellers launched in 2020. This feeds traffic to the behemoth’s network of US fulfillment centres.
According to Walmart, the pilot project exceeded expectations in terms of volumes and feedback. At its Marketplace Seller Summit on 27 August, the company announced plans to allow third-party sellers to use its supply chain for order fulfilment as well as returns through its Multichannel Solutions programme. Sellers can choose between an expedited shipping option of two business days and a standard option of three-to-five days.
The retail giant has also opened its ground carrier network to sellers through its Preferred Carrier programme, promising special rates for shipments ranging from a few items to a full truckload.
