Amazon Using Merchants Warehouse Space to Expand Inventory for Quick Delivery
Amazon is turning to merchants who sell on its marketplace for extra warehouse space, a less-costly way to expand inventory available for quick delivery; independent vendors provide half of all goods sold on site, online retailer can’t build its own facilities quickly enough.
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What’s an e-commerce giant supposed to do when it needs more warehouse space?
If you’re Amazon, you just ask the merchants whose stuff you’re selling to share, by offering to let them slap Prime labels on their products.
Amazon wants to be able to offer a wider array of products to more people, and get those items to them as quickly as possible.
So instead of building new warehouses, it’s taking the more cost-effective route of turning to its merchants.
According to Bloomberg, the Seller Fulfilled Prime program now lets merchants sell things on Amazon as “Prime Eligible” even if Amazon doesn’t handle packaging and delivery, Amazon announced today (see sidebar below).
This way, merchants who able to meet “a high bar” for shipping speed and customer service can slap the Prime label on orders and ship them out themselves.
Previously, sellers could have their items shipped directly from Amazon and participate in the Prime program that way, but they then have to pay fees to store their items in Amazon’s warehouses, as well as for packing and picking orders.
Amazon said it’s boosted the inventory available for Prime delivery within two business days by six million items under its Seller Fulfilled Prime program.
Sellers on Amazon Ready for Busy Holiday Season
Amazon predicts record-setting sales this year from businesses selling on Amazon as they prepare for a busy holiday season.
To help keep up with demand, sellers will benefit from the Fulfillment by Amazon (FBA) service and growing Seller Fulfilled Prime program to reach tens of millions of Amazon Prime members worldwide.
The Seller Fulfilled Prime program has already made more than 6 million new items available to Prime members across the U.S., U.K., France, Germany and Japan.
“We’re dedicated to making the fulfillment technology that Amazon develops available to sellers,” said Peter Faricy, VP for Amazon Marketplace.
“The FBA service and Seller Fulfilled Prime program are the greatest opportunities in e-commerce for sellers to easily reach loyal Prime members and expand their business. We are proud that we are empowering so many retailers to grow their business, many of them small businesses and entrepreneurs. In fact, 50 percent of the total units sold on Amazon are from sellers.”
- Easy deal scheduling: The Recommended Deals tool allows sellers worldwide to submit Lightning Deals in just two-clicks. Sellers have used the tool to increase the number of deals offered to customers by more than 500 percent this year.
- Automated pricing: Through the Automated Pricing tool, sellers can manage and automatically adjust prices on items based on seller-specified rules. Sellers can peg their prices to the Buy Box price or the lowest price, and Amazon will automatically adjust pricing. Sellers have reported the tool can reduce the amount of time spent managing pricing by up to 80 percent per week.
- Expanded features on the Amazon seller mobile app: The Amazon seller mobile app includes Selling Coach recommendations that help sellers quickly make pricing changes, visual search capability to help source and list items and Photo Studio to capture and retouch product photos from a mobile device. Sellers using the app have experienced an average lift in gross sales by more than 20 percent.
“Fulfillment by Amazon and Seller Fulfilled Prime have been a big advantage for our business. The programs have helped us increase sales this year by more than 30 percent month-over-month,” said Jeff McDonald, CEO and founder of Raw Paws Pet Food. “Seller Fulfilled Prime in particular has enabled us to expand product options for customers to offer different varieties and pack sizes of our all-natural dog and cat chews and treats.”
“In 2016, Fulfillment by Amazon has helped us reach more Prime members, increasing our sales by more than 100 percent,” said Jennifer McMillan, Founder of First State Trade. “Our business specializes in toys and keeping inventory in-stock is critical during the holiday season. The combination of FBA and Selling Coach helps us carefully manage inventory so customers can always get the items they want with two-day or next-day shipping.”
Last year on Cyber Monday, sellers on Amazon received orders for more than 23 million items, a more than 40 percent increase year-over-year. In 2015, FBA delivered more than 1 billion items to customers worldwide.
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