Amazon Shipping: Key Insights and Implications

This article was contributed by Michael Sachaj, Senior Principal of Hyde Park Angels.

Overview

• Summary: Amazon Shipping provides a ground shipping service for Amazon selling partners, which includes purchasing labels and scheduling a pickup from the merchants warehouse.
• Type of Orders: Amazon Shipping includes Amazon orders, orders from a customer’s website, and orders from other selling channels, like eBay.
• Delivery Window: Delivery window is in two to five business days. One of the articles positioned this window of time as a “deferred ground delivery service”
• Previous Process: Prior to the announcement, Amazon would determine which delivery service their packages would go through, whether it's UPS or Amazon's own shipping service.
• New Service: With Amazon Shipping, sellers now have the choice to use Amazon Shipping directly, even if they are shipping from their own warehouse. Amazon Shipping handles products sold on other channels, such as eBay or the seller’s own website. In order to leverage the service, the customer has to book the shipment through their own Amazon seller account and go through Amazon's own back-end system.
• Initial Pricing Insights: According to one merchant specializing in beauty products interviewed by Business Insider, Amazon's pricing isn't as competitive for small items, for now. It is anticipated that Amazon will become more price-competitive as it expands.
• Integrations: Amazon’s website highlighted that they partner with third-party aggregation sites such as Linn Works (Automated Inventory & Order Management), SellerCloud (Omnichannel Ecommerce Growth Platform), and Veeqo (Multichannel Shipping Software).
• Future State: Longer term, Amazon could expand beyond its own sellers and turn this into a standalone service that directly competes with UPS or FedEx. Amazon Prime Video and Amazon Web Services are two other examples of services that Amazon initially built in-house for their own use and then expanded the offering for others.
• Value to Amazon: Some analysts believe that Amazon Shipping will improve the profitability of Amazon’s supply chain by ensuring that they have increased utilization of their logistics infrastructure.
• Sources: WSJ, Business Insider, FreightWaves, Amazon, CNBC Video (1 Year Ago)
  
  

Amazon Shipping Timeline

• 2018: Amazon Shipping service launched. Article
• 2020: In response to sales growth related to COVID, Amazon paused their Amazon Shipping services for third parties. Article
• 2023: Amazon Shipping was relaunched. Article
  

Related Amazon News

• New Seller Fee Structure: On October 1st, 2023 Amazon will impose new fees on third-party sellers who ship their products to customers instead of using the company’s fulfillment service. Amazon will get  a 2% cut of every product sold by merchants that are members of Amazon’s Seller Fulfilled Prime Program, or a minimum of $0.25 per item. This comes even as Amazon faces a possible antitrust lawsuit from the FTC. Article (Note: At the publishing of this article, the lawsuit has gone forward).
• Expanding Amazon Air: In 2021, Amazon opened a $1.5B air hub in northern Kentucky, which includes 600 acres and 800,000-square-foot robotic sort center.  It is designed to have capacity for 100 Amazon-branded planes and handle an estimated 200 flights per day. The launch of this air hub is helping Amazon provide faster deliveries. Article