Transportation News

Amazon Reportedly Focusing on Expanding its Delivery Trial Offering Threatening FedEx & UPS

According to Bloomberg, Amazon is expanding its FBA Onsite service, previously called Seller Flex, to make more groceries, cleaning supplies and other products available for quick delivery directly from merchants without overwhelming the e-commerce giant’s warehouses with additional inventory, according.

Last fall, Bloomberg reported that Amazon was working on a new delivery offering geared towards making more products available for free two-day delivery while helping to relieve overcrowded warehouses, with this initiative driving the global ecommerce power into services typically handled for Amazon by UPS and FedEx.

The report, which was published in October, explained that Amazon first began work on this service, entitled Seller Flex, in India in 2015 and subsequently “slowly marketing” it to United States-based merchants with an eye on a national expansion.

And it noted that its U.S. launch kicked off on the West Coast earlier last year, which is expected to be followed by what the report called a broader rollout.

In terms of how Seller Flex works, Bloomberg said that Amazon will oversee package pickups from the warehouses of third-party merchants selling goods through Amazon.com and delivery to customers’ homes.

These tasks are currently handled for Amazon by UPS and FedEx. And while Amazon may still use UPS and FedEx for delivery, the report said that Amazon will decide how to send a package, as opposed to leaving that at the discretion of the seller.

Among the benefits of handling more deliveries for Amazon, cited in the report, are things like providing greater flexibility and control over the last mile to consumer’s homes, saving money through volume discounts, and helping to avoid congestion in Amazon warehouses through keeping merchandise in outside sellers’ facilities.

Other noted benefits include how Seller Flex would provide Amazon with more flexibility into warehousing and delivery operations of merchant partners, with the potential of making full use of their product inventory, storage, space, and customer proximity with a quick delivery guarantee.

A separate Bloomberg report, which was published today, indicated that Amazon has expanded the Seller Flex service, which Amazon has renamed to FBA Onsite.

The report explained that along with changing the name of the offering, Amazon is recruiting more sellers and telling merchants they can keep goods in their own warehouses, as in the past merchants had to send goods to Amazon facilities and then pay extra fees to participate in FBA Onsite, as well as Amazon’s household goods fulfillment service called Subscribe and Save that offers discounts on frequently purchased items.

Among the benefits of FBA Onsite cited in the report were: increasing inventory; shortening delivery times; reducing costs; and letting merchants send inventory to Amazon warehouses and pay Amazon to handle storage, packing and delivery.

Related: Amazon Crushes Earnings

Jerry Hempstead, president Hempstead Consulting

“The impact of FBA Onsite on UPS and FedEx is not perceived as a 'huge threat,' it is more of a logical nuance ”Jerry Hempstead, president Hempstead Consulting

FBA Onsite is interesting from a delivery and distribution on a few different levels, according to Jerry Hempstead, president of Hempstead Consulting, in a recent interview.

“It's for retailers that peddle their products on the Amazon site. So in some situations, dependent on volume, of course, it’s more efficient to pick up some packages I think they are looking at regional footprints) and inject the volumes directly,” he said.

This is in lieu of moving volume from retailer to Amazon fulfillment and then from Amazon fulfillment to consumer. This next logical step can reduce mileage on a piece of inventory, reduce handling, and reduce time to consumer gratification.”

As for the potential impact of FBA Onsite on UPS and FedEx, Hempstead said it is not perceived as a “huge threat,” saying it is more of a logical nuance. And he noted that some retailers that use Amazon to sell their items select their own carrier today but are required to meet Amazon’s delivery requirements and some of that business may be subject to diversion away from the integrators.

“I think this new offering will be limited in clientele and delivery footprint,” said Hempstead.

A research note issued last fall by Baird and Co. analyst Colin Sebastian said that Amazon’s final-mile efforts reflect a logical extension to its model as it builds network density, justifying incremental insourcing of purchased transportation spend, as well as ongoing efforts to continue managing rising costs in its final-mile delivery network.

Read: Is Amazon About to Disrupt Another Billion-Dollar Market – Third Party Logistics?

In recent years, Amazon has been diligent in expanding its own logistics network in the form of things like opening 20 regional sort centers and launching its own air network contracting with ATSG and Atlas Airlines.

Other logistics-related efforts of note by Amazon include things like testing drone delivery of parcels and building an Uber-like app for freight, among others.

Related: Amazon Doesn’t Have Enough Route Density for Its Own Delivery Service

Related 'Amazon' White Papers

Download the Paper

Amazon’s Move into Delivery Logistics
Many industry players and experts are waiting anxiously to see what innovations Amazon will come up with next – and above all, whether Amazon will enter into delivery logistics under its own banner. Download Now!


Download the Paper

Chasing Amazon: Building a Dynamic Warehouse Network
Most of Amazon’s competitors are feverishly playing catch-up, and if your company is among them, reassessing your supply chain design, particularly pricing and quick delivery, is a good place to start. Download Now!


Download the Paper

Amazon: Yet Another Massive Market on the Horizon
Amazon has “powerhouse potential” in the large transportation and logistics market, dominated by global enterprises such as DHL, FedEx, and UPS. Download Now!


Download the Guide

Home Delivery and Same-Day Delivery for Retailers
Retailers are struggling to respond to the new threat of online giants like Amazon, who are siphoning off the customers of traditional retailers, what is driving this and what can retailers do to retaliate against this threat? Download Now!


Download the Paper

How Industrial Distributors Should Compete with AmazonSupply
Companies that recognize and respond to the shift in power to the customer are winning hearts and wallets, the key is not to get hung up on trying to save a penny. Download Now!


Download the Paper

Global E-Commerce Logistics
Regardless of who is winning the race for volumes and profits, consumers continue to spend and the e-commerce logistics market continues to grow. Download Now!


Download the Paper

State of Online Freight Sales
While many business-to-business sales industries continue to expand sales online, the logistics industry has been slow to adopt online freight sales and booking, leaving ample space for ambitious forwarders to expand sales with new channels. Download Now!


More  "Amazon" Related Papers

Article Topics
Trends   Transportation   Transportation Management   Amazon   Delivery Service   Fulfillment   Last Mile Delivery   All topics


Comments
1 Comments (displaying chronologically) Post a comment
You must be logged in to post a comment. Login.

About the Author
Jeff Berman, Group News Editor
Jeff Berman is Group News Editor for Logistics Management, Modern Materials Handling, and Supply Chain Management Review. Jeff works and lives in Cape Elizabeth, Maine, where he covers all aspects of the supply chain, logistics, freight transportation, and materials handling sectors on a daily basis. Contact Jeff Berman
 
Latest Transportation News
Global Online Logistics Community: If You Build It They Will Come, Sometimes
A global online logistics community should be a vibrant entity where transparency of information, pricing, and service levels empower enterprises, carriers, and suppliers to take full advantage of revenue…

Realizing a New Vision for TMS Design
A couple of years ago, we set out on a new project to redesign our user interface with the goal of setting a new standard by which all TMS user interfaces would be measured against.

Landstar System Joins Blockchain in Transport Alliance
Landstar System, Inc., a worldwide, asset-light provider of integrated transportation management solutions delivering safe, specialized transportation services, today announced it has joined the Blockchain…

XPO Logistics Expects 750,000 European “Last Mile” Home Deliveries in 2018
XPO Logistics has used rapid-fire acquisitions to grow from a $175 million truck brokerage company in 2012 to a $15.38 billion freight and logistics behemoth, but its European expansion, for now, is being…


 

24|7 Pro Team

The 24|7 Team is your direct pipeline to solutions for your business challenges. It's your opportunity to have supply chain and logistics experts look at your specific challenges and needs, and give you free, no-obligation advice, solutions, and information.

The 24|7 Team will simplify the task of creating a database of likely partners, building your knowledge base, and preparing your Request for Proposal list.

1
  Choose a topic for your RFP

Transportation RFP/RFI

The Transportation RFP is your direct pipeline to solutions for your transportation challenges. It's your opportunity to have logistics experts look at your specific transportation challenges and needs, and give you free, no-obligation advice, solutions, and information specific to your request.

Choosing the perfect software or system can be an indomitable challenge. Using this transportation/TMS RFP will simplify the task of creating a database of likely partners, building your knowledge base, and preparing your Request for Proposal list.

Warehouse/DC Management RFP/RFI

The Warehouse Management Systems (WMS) RFP is your direct pipeline to solutions for your WMS challenges. It's your opportunity to have logistics experts look at your specific WMS challenges and needs, and give you free, no-obligation advice, solutions, and information specific to your request.

Choosing the perfect WMS solution can be an indomitable challenge. Using this WMS RFP will simplify the task of creating a database of likely partners, building your knowledge base, and preparing your WMS Request for Proposal list.

Supply Chain RFP/RFI

The Supply Chain RFP is your opportunity to have logistics experts look at your specific challenges and needs, and receive free, no-obligation advice, solutions, and information. It simplifies finding a pool of likely partners, building your knowledge base, and preparing your Request for Proposal list. The companies in the Logistics Planner have agreed to respond to your request for in-depth information and follow-up, and your request is totally confidential.

Software/Technology RFP/RFI

The Software/Technology is your direct pipeline to solutions for your logistics information technology challenges. It's your opportunity to have logistics experts look at your specific technology challenges and needs, and give you free, no-obligation advice, solutions, and information specific to your request. Whether it's WMS, TMS, Mobile or Cloud, our pros can help.

The companies listed below have agreed to respond to your request for in-depth information and follow-up. Your request is totally confidential.

Executive Education RFI

The Logistics and Supply Chain Education RFI can help you identify the schools, coursework, continuing education, distance learning and certification opportunities available from leading logistics educational institutions.

Upgrade and improve your logistics and supply chain skillsets. Whatever route you choose—advanced degree, executive education, certification or distance learning—the time and money you invest in your education today can pay off in continued career success tomorrow. Contact leading universities and professional institutions for the information you need to prepare for the future.

Third Party Logistics RFP/RFI

This 3PL Request for Proposal (RFP)/Request for Information (RFI) can help you find the 3PL and 4PL providers that can meet your specific 3PL service challenges and needs. The 3PL companies below will provide free, no-obligation third-party logistics advice, solutions, and information.

Ask your 3PL questions, you'll get answers. Simply complete the information, and detail your 3PL challenges. Then, check off the third-party logistics companies that you want to review your request.

1. Choose an RFI topic.
2. Enter your contact information and challenge.
3. Select companies and optional categories.
4. Submit.


2

Your Information



Your Challenge, Problem or Request *

3

Select Transportation Companies

  • Select All

  • 3Gtms
  • BluJay Solutions
  • CSX Trans. Intermodal
  • Kuebix
  • Landstar
  • Legacy Supply Chain Svs.
  • One Network
  • Pitt Ohio
  • Purolator
  • Quintiq
  • SEKO Logistics
  • SMC3


Select Relevent Categories

  • Air Freight
  • Intermodal
  • Motor Freight
  • Ocean Freight
  • Rail Freight
  • TMS

Select Warehouse/DC Management Companies

  • Select All

  • 3PL Central
  • Apex Supply Chain Tech.
  • Honeywell Intelligrated
  • Kuebix
  • Legacy Supply Chain Svs.
  • Swisslog
  • Westfalia Technologies
  • Zebra Technologies


Select Relevent Categories

  • Auto ID & Data Capture
  • Automation
  • Conveyors & Sortation
  • Lift Trucks
  • Packaging & Labeling
  • Pallets & Containers
  • Shelving & Racking
  • WMS

Select Supply Chain Companies

  • Select All

  • 3Gtms
  • 3PL Central
  • Amber Road
  • Apex Supply Chain Tech.
  • APICS
  • BluJay Solutions
  • CSX Trans. Intermodal
  • Frontier Business
  • Kuebix
  • Legacy Supply Chain Svs.
  • Logility
  • One Network
  • Purolator
  • Quintiq
  • SMC3
  • Synchrono
  • TAKE Supply Chain
  • Westfalia Technologies
  • Zebra Technologies


Select Relevent Categories

  • Global Trade
  • Inventory Management
  • Risk Management
  • Sustainability

Select Software/Technology Companies

  • Select All

  • 3GTMS
  • 3PL Central
  • Apex Supply Chain Tech.
  • BluJay Solutions
  • Honeywell Intelligrated
  • Frontier Business
  • Kuebix
  • Logility
  • One Network
  • Quintiq
  • SMC3
  • Swisslog Logistics
  • Synchrono
  • TAKE Supply Chain
  • Zebra Technologies


Select Relevent Categories

  • ERP
  • Sales & Operations
  • Sourcing/Procurement
  • Optimization
  • Transportation Mgmt
  • Warehouse Mgmt

Select Executive Education Choices

  • Select All

  • Graduate Courses
  • Online/Distance
  • Executive Education
  • Certifications
  • Undergraduate
  • Seminars
  • Associations
  • Conferences
  • Tradeshows


Select Third Party Logistics Companies

  • Select All

  • 3PL Central
  • Landstar
  • Legacy Supply Chain Svs.
  • Purolator
  • SEKO Logistics
  • Westfalia Technologies


4
 

24|7 Company Profiles