Today’s Pickup: Amazon testing direct ship program

Amazon is testing a service that would have packages shipped directly to end customers from third-party sellers rather than having the item shipped to Amazon's warehouse first. (Photo: Shutterstock)

Amazon is testing a service that would have packages shipped directly to end customers from third-party sellers rather than having the item shipped to Amazon's warehouse first. (Photo: Shutterstock)

Good day,

Amazon is now testing a delivery service that would make more products available for two-day shipping. Called Seller Flex, the service would apply to items purchased from third parties through Amazon’s e-commerce site. 

Now being tested on the West Coast, the service would pick up items purchased at third-party sellers warehouses and delivery directly to the end customer rather than the current system of having the seller ship the item to Amazon’s warehouse for final delivery.

While Amazon could utilize its own network for the logistics, it could also be a boost to UPS and FedEx, says a Morgan Stanley research note.

“While Amazon could still end up using UPS/FedEx for delivery, we note that the unit economics of that delivery would be Amazon’s, not the smaller third-party seller’s, which is probably a significant mix headwind to UPS/FedEx,” the note points out. “With Seller Flex, even if Amazon is not doing the delivery in-house (or if someday AMZN completely scraps its internal logistics operation), by inserting itself into the transaction between the shipper and UPS/FedEx, Amazon is making sure that it will have a say in lowering logistics costs and improving service.”

Morgan Stanley also notes that this could be the impetus for smaller sellers to list their products on Amazon’s platform, rather than their own and handling shipping themselves.

“Seller Flex allows small shippers and even those who do not wish to use Amazon fulfillment, to tap into the omnichannel power of Amazon’s network,” the note says. “This could pressure fledgling efforts by the legacy parcel companies to try to take on Amazon with their own fulfillment operations. As a small seller, how long can you insist on not being on the Amazon platform and the superior service and economics that comes with it?”

Did you know?

Sales of Class 8 used trucks rose in August 16% year-over-year, but prices fell to a six-year low at $38,641, ACT Research said.

Quotable:

“Blockchain has the potential to make significant improvements in security, transparency, and governance, but only in supply chains where there is value in controlling consumer risk, valuable goods or complying with regulations. Shippers and 3PLs will need to work together to drive value from blockchain, using lessons collectively learned from missteps with other emerging technologies, like Radio Frequency Identification (RFID).”

- Ken Toombs, global head of Infosys Consulting, quoted in the 22nd Annual Third-Party Logistics Study for 2018

In other news:

Employment slows in September

Hiring at private businesses slowed in September, adding just 135,000 jobs according to Automatic Data Processing data. (Wall Street Journal)

Robot helper

Deutsche Post is testing a companion robot to follow mail workers and carry the mail for them, hoping to reduce stress on the worker and worker’s comp claims. (Star Trade Times)

Missouri studying hyperloop

The Missouri Department of Transportation will study the feasibility of hyperloop technology to move people and goods across the state in just 25 minutes. (New Atlas)

Trailers and telematics

Technology is advancing quickly, and trailers are getting on board as the demand for data is now extending to the boxes behind the cab. (Heavy Duty Trucking)

FHWA gives grant to Virginia to build port truck reservation system

Virginia has received a grant from the Federal Highway Administration to build a truck reservation system at its port to reduce truck wait times. (Transport Topics)

Final Thoughts

Amazon is now testing a delivery program that will pick up customer’s orders at third-party seller’s warehouses and delivery directly to the end customer, rather than sending that item through Amazon’s warehouse. This moves Amazon one step closer to becoming a true logistics company.

Hammer down everyone!