Amazon ramps up competition between FedEx and UPS by expanding Prime to third parties

Amazon It will allow other online merchants to use its main services to quickly deliver goods to their customers.

The company on Thursday launched a new service, Buy with Prime, which allows third-party merchants to use Amazon’s extensive shipping and logistics network to fulfill orders on their own sites, while also attracting Amazon’s more than 200 million customers.

These websites will be able to place the Prime badge on their websites next to eligible items for free two-day or next-day delivery. Prime members will use the payment and shipping information stored on their Amazon account to place an order.

Buying with Prime will not be free for sellers, and the price will vary depending on payment processing, fulfillment, storage, and other fees.

To get started, the service will only be available by inviting sellers who use Fulfillment by Amazon or FBA. With this service, merchants pay to store their inventory in Amazon warehouses and take advantage of the company’s supply chain and shipping processes. Eventually, it will be extended to other merchants, including those who don’t sell on Amazon.

Amazon has always set its sights on being the fastest in the online delivery race. For years, the company has reinjected profits into physical expansion, and has grown fulfillment centers and freight partnerships across the country in order to offer two-day and same-day delivery in more markets. You have amassed a huge fleet of delivery drivers, trucks and planes to speed packages to customers’ doors.

Industry watchers have paid close attention to Amazon’s growing logistics operations internally, speculating that it aims to compete directly with major carriers such as UPSAnd FedEx And the US Postal Service. In fact, Dave Clark, Amazon’s CEO of Worldwide Consumers, told CNBC last year that Amazon is on track to become the largest delivery service in the country by early 2022.

The company is already handling some orders for products sold on some other websites. It offers a program called Multi-channel loyaltywhich allows sellers to stock and ship products using Amazon services regardless of whether or not they’re selling on the home site.

Amazon previously offered a service where its drivers pick up packages from retailers and deliver them to consumers, but that’s just how it is. Paused at the start of the coronavirus pandemic Amazon has become overwhelmed with online orders.

Bob O’Donnell, founder and chief analyst at Technalysis Research, said that while Buy with Prime is likely to remain small at launch, it could grow into a profitable Amazon service over time.

“If you think about it, one of Amazon’s most successful companies started out as an internal tool,” O’Donnell said. Being AWS [Amazon Web Services]Definitely.

“They built this huge logistics business initially for their own purposes, and now what they’re starting to do is take advantage of that as their own service,” O’Donnell added.

In some ways, Amazon has already turned its massive shipping and logistics operations into a cash machine. Amazon reported that third-party seller services, which include commissions, fulfillment fees, and shipping, among other services, grew 11% year-over-year to $30.3 billion. in the last quarter.