What does all the noise around Amazon’s ‘Seller Flex’ program mean?
Amazon is testing a new delivery program called “Seller Flex” through which the e-commerce giant picks up packages from its third-party sellers and delivers the products to consumers, according to Bloomberg.
For Amazon, Seller Flex is expected to reduce overcrowding in its warehouses and enable two-day Prime shipping for more of its products. Taking greater control over the logistics of its third-party packaging also promises to give online shoppers a more consistent experience.
In some cases, Amazon will just pick up of packages from sellers. Morgan Stanley noted that, due to the better rates Amazon negotiates with carriers, UPS and FedEx will make less money with Seller Flex on such deliveries if they are purchased through Amazon.
But getting much of the attention is the prospect of Amazon replacing the major carriers for delivery. In a statement released to the media, Amazon said Seller Flex will use “the same carrier partners to offer this program that we’ve used for years, including UPS, USPS and FedEx,” but shares of the carriers were under pressure as news arrived last Friday that some saw the move as another step by Amazon to take more control of the last mile.
In a note, Credit Suisse called the Seller Flex test “more noise than anything of substance” and believes handling such third-party merchant deliveries would largely impact the USPS. But others felt that Amazon may be able to use smaller delivery partners like XPO Logistics and JB Hunt Transport Services instead of UPS and FedEx.
“Given the investments that Amazon is making in fulfillment infrastructure and transportation to support its own retail business, we view it simply a matter of time until they offer these services to third parties more broadly,” Baird analyst Colin Sebastian wrote in an e-mail to CNBC. “This is the same strategy that Amazon has successfully utilized in retail (third party marketplace) and technology (AWS) where they offer as a service the same platforms built to run their business.”
DISCUSSION QUESTIONS: What will Seller Flex mean for Amazon’s retail business? Do you see the launch of Seller Flex as a major step toward Amazon building its own delivery network and taking more control over the last mile?