Amazon is expanding the scope of its omnichannel services. This time it’s helping ease a friction point that is becoming increasingly tense heading into the 2021 holiday season — delivery.
Local Selling is an additional sign of Amazon broadening its capacity when it comes to supply chain and logistics, similarly to what Walmart is constructing through selling its omnichannel capabilities to other businesses.
Amazon has been on a logistics-related expansion spree as it works to internally control its supply chain. The company spent $35 billion in capital expenditures in 2020, dwarfing Walmart’s $10 billion. Amazon has directed much of its investments to establishing a footprint close to consumers. Now, 63% of the U.S. population lives within an hour drive of Amazon’s fulfillment and redistribution centers.
Over half of all products purchased on Amazon are sold by third-party sellers, and the e-commerce giant is increasingly reliant on those merchants to bolster its revenue streams. In the company’s second quarter this year, revenues from services for its third-party marketplace sellers rose 38% to $25.1 billion, and marketplace growth outpaced the company’s own retail sales growth.
Additionally, consumers may be primed to pick up items at local stores due to pandemic-related shopping patterns. Last-mile delivery, and the cost it incurs, has long been a retail issue. But, last year saw a significant increase of retailers of all sizes offering BOPIS services, cutting back on the time and expense of getting goods in the hands of consumers. That trend was in part fueled by concerns regarding timely holiday fulfillment.
Those delivery concerns are prevalent this year as well, along with widespread supply chain bottlenecks as consumer demand surges. UPS CEO Carol Tomé estimated that during this year’s peak season, volume would exceed capacity by 5 million parcels each day.
The services may also give Amazon third-party sellers additional options when met with costly delivery expenses. This year, both UPS and FedEx announced surcharges ahead of the peak shipping season, and smaller businesses typically don’t have clout or scale to negotiate with these services on price.
Post time: Jan-06-2022