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Amazon will let other online retailers use its Prime service to quickly deliver goods to their customers.
The company on Thursday launched a new service, Buy with Prime, that allows third-parties to use Amazon’s vast shipping and logistics network to fulfill orders on their own websites, while also serving Amazon’s more than 200 million Prime customers.
These sites may place the Prime logo on their sites next to items eligible for free two-day or next-day delivery. Prime members use payment and shipping information stored in their Amazon account to place an order.
Buying with Prime isn’t free for sellers, and prices vary depending on payment processing, fulfillment, storage, and other fees.
Initially, the service will be available by invitation only to sellers using Fulfillment by Amazon or FBA. With this service, merchants pay to have their inventory stored in Amazon’s warehouses and use the company’s supply chain and shipping operations. Eventually it will expand to other merchants, including those that don’t sell on Amazon.
Amazon has long strived to be the fastest in the online delivery race. For years, the company has been reinvesting its profits into physical expansion, expanding its fulfillment centers and shipping partnerships across the country to offer two-day and same-day delivery in more markets. It has built up a sizeable fleet of its own delivery drivers, trucks and planes to deliver packages quickly to customers’ doorsteps.
Industry watchers have been keeping a close eye on Amazon’s growing internal logistics activities, speculating that it aims to compete directly with major carriers like UPS, FedEx and the US Postal Service. In fact, Amazon Worldwide Consumer CEO Dave Clark told CNBC last year that Amazon was on track to become the country’s largest delivery service by early 2022.
The company is already processing some orders for products sold on some other websites. It offers a program called Multi-Channel Fulfillment that allows sellers to stock and ship products through Amazon’s services, regardless of whether they sell on the Home site.
Amazon previously offered a service where its drivers picked up packages from retailers and delivered them to consumers, but it was paused early in the coronavirus pandemic when Amazon was overwhelmed with online orders.
While Buy with Prime will likely remain small at launch, over time it could grow into a lucrative service for Amazon, said Bob O’Donnell, founder and principal analyst at Technalysis Research.
“If you think about it, one of Amazon’s most successful companies was started as an internal tool,” O’Donnell said. “This is AWS [Amazon Web Services]Of course.
“They originally built this huge logistics company for their own purposes and are now starting to use it as their own service,” added O’Donnell.
In a way, Amazon has already turned its massive shipping and logistics operation into a money-making machine. Amazon reported that third-party seller services, which includes commissions, fulfillment and shipping fees, and other services, grew 11% year over year to $30.3 billion last quarter.