(Bloomberg) – Amazon.com Inc. intends to make it more difficult for buyers to ship products themselves, which means they are more likely to pay the company to handle the task.
New shipping performance requirements, announced in an email to Tuesday to buyers, will require third-party sellers to deliver on Saturday and meet new February one- and two-day deliveries. If buyers do not meet the goals, they risk losing a coveted Prime shipping badge that affects which products buyers buy.
Amazon said the changes are necessary because deliveries from sellers are often late, while shoppers say they worry they will be forced to pay for Amazon logistics without a chance to shop.
The move has potential antitrust implications as buyers are forced to increase product prices if Amazon logistics cost more than United Parcel Service Inc., FedEx Corp. if the US Postal Service pays.
Amazon introduced Seller Fulfilled Prime five years ago to help ship the number of products shipped quickly by some buyers to process the delivery themselves. The goal was to reduce bottlenecks in Amazon warehouses, as products would go directly from vendors to Prime subscribers, who pay monthly or annual fees for delivery discounts and other perks – and typically spend more than other Amazon customers. shoppers.
Now Amazon says the program’s performance is abysmal and raising standards as part of an effort to reduce delivery times for many products from two days to one. Prior to the Covid-19 outbreak, less than 16% of Amazon orders shipped via Seller Fulfilled Prime in the U.S. met a two-day delivery promise, largely because participants were unable to deliver weekend deliveries, Amazon said.
“Amazon is making significant investments in our fulfillment and transportation capabilities to make Prime faster, transitioning from a two-day to a one-day delivery program,” the email said. “While we continue to improve the Amazon Prime experience for customers, we want to ensure that Seller Fulfilled Prime meets customer expectations about Prime.”
By increasing performance metrics that Amazon itself assesses, the company will entice more buyers to pay Amazon for logistics instead of competing services, said Shaoul Sussman, a legal colleague at the Institute for Local Self-Reliance, a frequent Amazon critic.
“Amazon keeps these sellers at a very standard that Amazon itself does not even follow,” he said. “It simply came to our notice then. The way to kill it is with very high cost of serving and forcing those who want to do their own delivery in fulfillment by Amazon. ”
In a letter to federal lawmakers last year, an online retailer accused Amazon of forcing him and other sellers to use the company’s expensive logistics services, which in turn forced consumers to raise prices. The letter also accused Amazon of ‘stealing’ its marketplace and logistics services ‘a bond’, a potential anti-trust breach in which a company uses dominance in one market to give itself an advantage in another market where it less established.
Sellers said delivering products on their own was potentially more expensive than Amazon’s services. However, the most commonly used Fulfillment By Amazon is to avoid being penalized for performance issues and because that means their products mean more visibility on the site. In the letter, the buyer said that Amazon had increased its fees by 20% in the previous four years until they were 35% more than competing services. Amazon disputes the allegations.
“As we move toward One Day Delivery, we are making changes to Seller Fulfilled Prime to deliver fast, consistent delivery to customers, regardless of the delivery method,” said a Amazon spokeswoman. “We are informing sales partners now so they have time to adapt their business and set up a dedicated support team to guide them through these adjustments and help them succeed.”
Amazon has been developing its own delivery campaign for years to reduce its reliance on UPS, FedEx and USPS for the critical ‘last mile’ to a customer’s home. Providing logistics services to buyers is a rapidly growing source of revenue for Amazon. Third-party logistics services, which include logistics, generated sales of $ 18.2 billion in the second quarter, up 52% from a year earlier and well over $ 10.8 billion of their profitable cloud computing Amazon Web Services Division.
Amazon needs to reduce delivery times as it faces competition from major rivals such as Walmart Inc. investing in same-day delivery from thousands of stores around the country, said Neil Saunders, a retail analyst at GlobalData in New York.
“Anything that is a monopoly does not have to respond in this way to conditions of competition,” Saunders said. “Amazon is working overtime to make sure it meets delivery promises and enhances the experience because customers have more choices about where they can shop online.”
(Updates with context in third paragraph.)
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