Last year, we saw reports from the WSJ of a new logistics service called “Shipping With Amazon,” which purportedly will compete with traditional logistics providers like UPS and FedEx. Few details have emerged, but last fall CNBC reported that “Amazon Shipping” was offering to take goods from sellers’ warehouses to Amazon fulfillment centers at cheaper prices than UPS or FedEx, and that the service was being tested in Los Angeles.
Now, we are hearing additional details about Amazon’s new Amazon Shipping service.
1. Amazon Shipping is a full seller-to-customer shipping service, not just a “seller to Amazon FC” shipping service.
With Amazon Shipping, invited sellers can print shipping labels directly using their existing Amazon tools and dashboards, we understand. Then, Amazon will pick up packages directly from sellers’ warehouses every weekday and deliver them to Amazon customers 7 days a week.
2. Amazon Shipping currently delivers packages nationally via ground.
Amazon is telling invited sellers it can reach most US destinations via ground within 5 calendar days, we are told. This means that Amazon Shipping is not currently being used to fulfill most regular Prime volume. However, we understand Amazon Shipping is being used to fulfill Seller Fulfilled Prime shipments to customers who live within a 2-day ground shipping radius from participating seller warehouses. It is possible that Amazon Shipping is also being used to ship those Prime items that take longer than the standard 2 days to ship, such as some large or bulky items.
3. Amazon Shipping is currently operational for sellers with warehouses in the greater Los Angeles, Chicago, and New York/New Jersey areas.
We do not know how many sellers Amazon has invited, but Amazon does appear to have expanded the geographical reach of warehouses it will originate shipments from, as we are hearing that the system is now live for invited sellers shipping from the New York, Los Angeles, and Chicago vicinities. We currently have no reason to believe Amazon will not continue to broaden the areas it can handle shipments from in the future.
Big picture, it appears as though Amazon Shipping as a national ground shipping service is real and growing.
While Amazon Shipping currently only originates shipments from warehouses in three major metro areas, we generally expect that to grow over time. In addition, while we understand Amazon Shipping currently only operates via ground, we generally expect Amazon to employ more of its logistics assets and expertise to incorporate air and other modes of transportation in the future. We also expect Amazon to continue to work with logistics partners both for regular Prime shipping and possibly for certain parts of the Amazon Shipping network as well.
Amazon is perhaps uniquely capable of sustained investment in new national and global logistics systems. We’ll continue tracking Amazon Shipping as it grows.