Posted by Alex Jackson on 20th Sep 2019
Fulfillment by Amazon undoubtedly changed the online retail business in many ways and has also spawned a whole host of copycats eager to emulate the business model. Recently we looked at eBay, and it plans to expand into fulfillment services by 2020. eBay is taking a slightly different approach and has partnered with various third parties to handle the heavy lifting of storing and shipping (see our recent article here). There are more big names already in the field like FedEx and UPS and our latest entrant, Walmart certainly knows a thing or two about retail, shipping, and logistics. Walmart's physical footprint is virtually unrivaled, in 2017, the combined square footage of both their retail spaces and their warehouses was about 900 million square feet. In terms of square footage, that's the size of Manhattan with a bit to spare. Add to this mix a massive fleet of 6000 plus trucks, and you got yourself a business capable of efficiently handling the volume and challenge of shipping and storage for third-party sellers.
We have spent some time looking at the who's who list of companies now offering fulfillment services, but not asked the fundamental why question yet. Why are shipping companies and retailers virtually tripping over themselves to provide fulfillment services to third-party independent entrepreneurs? It all has to do with an essential fact about Amazon; nearly 50% of the marketplace's sales come from third party sellers. Not only are third-party sellers generating sales, but they are also making profits for each unit stored and processed whether it sells or not. Think about it from the perspective of a Walmart, UPS, or FedEx. You have the warehouses and the transportation covered, and it means either increased sales in Walmart's case or increased volume processed in the case of FedEx or UPS. Last but not least, all three can count on storage and processing fees, which is a new revenue stream for all three companies with very minimal risk. Why is everyone in fulfillment theses days? They all want that new revenue that Amazon has been so successfully generating since 2006.
Now, this brewing fulfillment war is going to get ugly for those doing the fulfilling but pretty darn good for our readers. You know just how easy Foxliquidation makes it to shop for liquidation merchandise to resell and line your pockets, now imagine a world where all of these big-name retailers and shippers will be fighting to store and process your orders? They want and need you, and a race to grab market share from Amazon is already on. Not happy with Amazon fees? Take your merchandise somewhere else you have plenty of options these days, and that list will only get longer.
Back in 2006, when Amazon first launched their Fulfillment by Amazon program, most industry analysts were not throwing around words like innovative or revolutionary to describe it. Quite the contrary, this was 2006, Amazon was big but not the dominant force that it is today. At the time, Fulfillment by Amazon was looked upon as quite a big gamble [...]
Since we are all probably feeling a bit queasy and bloated today from too much turkey, stuffing and other Thanksgiving goodies let’s try to keep things light and look at holiday season shipping. This is a subject that touches everyone in online retail small or large, you rely on your preferred parcel carrier daily to get that package safely to [...]
In a previous post, we looked at how Amazon is changing the way we receive our purchases, with their push to increase their physical footprint in the form of in-store pickup and Amazon kiosks. So why is Amazon doing this? It’s not to deter the package pilferers though this certainly is an added benefit. There is also a certain degree of [...]
In case you missed it Amazon made an announcement this week about a new home delivery service called Amazon Key. Basically it’s a camera with a smart lock; the carrier scans the package, once authorized the door unlocks and the camera records as the carrier places the package inside the door. Once completed, the carrier swipes a second time [...]
Fulfillment by Amazon the greatest thing since sliced bread for small and medium sized internet retailers, but recently some of the magic has faded with the increasing costs for storage and handling fees. Apparently others have been taking note of the growing frustration experienced by these sellers and that someone is FedEx. Wait why would FedEx want to get [...]