Amazon are starting to expand their Shipping with Amazon service, as they start to monetise themselves, effectively becoming an Amazon Courier service offered out to people that don’t sell on Amazon.
It’s relatively small scale at the moment with Shipping with Amazon only operating in the Los Angeles, Chicago, and New York/New Jersey areas according to TJI Research, but it’s the sign of things to come.
TJI Research are questioning whether Amazon simply have more capacity than they need in order to ship Amazon Prime orders, or more correctly orders from Amazon FBA and those seller on the Seller Fulfiled Prime offering. Here at Tamebay however we think that this has been Amazon’s plan all along.
Shipping with Amazon a natural extension of the Amazon business model
Amazon have a history of monetising their services in order to get economies of scale for themselves. They build solutions to assist their own business and in order to assist expansion they monetise them by selling services to anyone and everyone willing to pay for them:
Amazon were originally a retailer but they realised by opening a marketplace they could offer greater choice and selection by inviting third party merchants to sell on their platform. They make more money from third party sales then they do as on their own retail sales as they don’t have to invest in stock.
Amazon needed servers to run their retail operations and marketplace on so they built a server network across the entire globe and to monetise it and in order to be able to expand quicker they rent out space on their servers in what’s now known as Amazon Web Services (AWS).
As a retailer, Amazon built warehouses and in their aim to get stock ever closer to the end user they rent out space in these warehouses to third party merchants in their Fulfilment by Amazon (FBA) program.
Now they are building Amazon Logistics as their own delivery network and it’s natural that if a driver is going down a road dropping off parcels that Amazon will save money long term by renting out their courier network in the Shipping with Amazon program.
We wrote previously about how Amazon Logistics should worry courier services. Amazon have a relentless desire with their customer obsession mantra to deliver the best possible experience, and even now there are few carriers who delivery seven days a week on a regular basis but Amazon do. Shipping with Amazon is a pretty compelling proposition for businesses who don’t sell on Amazon but want to access a courier network run by a company who are laser focused on fast delivery, seven days a week, with superb tracking and very likely at a lower cost than traditional couriers or postal services can offer.
As an aside, it’s worth noting that Amazon are already firmly established as the UK’s fourth largest courier by parcel numbers, and that’s if they’ve not already overtaken Yodel. Only Hermes and Royal Mail deliver more parcels but that could change in the near future.
Expect to hear a lot more about Shipping with Amazon for businesses that don’t sell on Amazon over the course of the next year. Amazon Logistics is coming to a street near you and it won’t be just Amazon parcels that they are delivering.