Amazon expands deliveries to serve unlikely clients: its rivals
For Ella Wynn, an Amazon box turning up on her doorstep in Manhattan’s East Village was both unexpected and uncomfortable.
“I haven’t ordered anything off Amazon in over a year and a half,” Wynn said. “I hate the waste of their shipping methods and the consumer culture it promotes.”
She had bought a shower curtain from a seller on Etsy, the marketplace known for its handmade goods, and a common destination for those seeking alternatives to Jeff Bezos’s empire.
Moments like this are becoming more frequent as customers react with puzzlement, and sometimes anger, as Amazon steps up its efforts to deliver not only its own orders but also those of its rivals.
“Amazon has spent years building one of the world’s most efficient and optimised supply chains,” the company explained in a recent job posting related to the move. “Now, Amazon’s Multi-Channel Fulfillment program is looking to redefine how businesses utilise our supply chain capabilities.”
It added: “Our vision is ambitious — to fulfil orders for customers around the world, regardless of where the transaction occurs.”
Amazon Multi-Channel Fulfillment (MCF) is a lesser-known subdivision of the company’s highly successful Fulfillment By Amazon (F(BA)) programme. Where F(BA) stores, packs and delivers to Amazon customers, sometimes in as little as a day, MCF offers much the same for sales on other websites, such as Walmart, eBay, Etsy, Shopify and several others.
Sellers gain the convenience of keeping their stock within one system, while Amazon grabs a slice of its competitors’ business — leveraging the immense capabilities of its delivery network, the capacity of which has more than doubled in the past two years.
MCF has existed in some form since 2007, but Amazon is now pricing it more competitively with other logistics providers; entering into new software partnerships to promote and streamline its use; and implementing workarounds designed to circumvent the objections of competitors who would prefer Amazon did not deal with their customers.
It means that on top of its approximately 40 per cent market share of US ecommerce, Amazon stands to gain an even greater understanding of the shopping habits of global consumers.
“It’s right in [Amazon’s] playbook,” said Peter Kearns, a former business development manager for Amazon’s fulfilment services. “They already have a large ecommerce infrastructure with millions of sellers and billions of units. It makes total sense.”
Amazon has not given any indication as to how much of its capacity is being used to handle MCF orders. Etsy and Walmart also declined to comment on how much they use the service. Overall, however, logistics analyst Marc Wulfraat estimated Amazon could handle as many as 7.5bn packages in 2021, not including those it sent off with the likes of FedEx or UPS.
Walmart has explicitly prohibited the use of Amazon logistics, blocking tracking numbers associated with the Amazon delivery network. “It causes confusion when people order something from Walmart and it’s delivered in another retailer’s box,” said Carrie McKnight, a Walmart spokesperson, who declined to comment on the company’s wider concerns.
Starting in June, Amazon made it possible to evade Walmart’s measures, allowing sellers to store products in Amazon’s warehouses, have orders processed and packed in Amazon boxes, but then, for a 5 per cent surcharge, use an alternative delivery carrier to do the final step.
That may soon change. In May, Amazon launched a waiting list for sellers interested in joining a pilot programme that would place MCF orders into unbranded boxes.
While it may seem counterintuitive for Amazon to make it easier to sell on other stores, the push for MCF comes as sellers increasingly seek to diversify where they place their products, thanks in part to the elevated demand across the entire ecommerce sector owing to the pandemic.
In July, Amazon announced it would be directly integrating MCF with BigCommerce, a leading management software provider for “omnichannel” sellers — those who sell goods across multiple stores at once.
“Amazon is modularising their fulfilment capability, so that you can use it as your outsourced warehouse now,” said Sharon Gee, BigCommerce’s general manager for omnichannel.
“What they are doing is saying, ‘We have the most global network with the most advanced order routing capabilities to make sure that you can have a two-day delivery promise’.”
Competing marketplaces, Gee said, would need to enter “frenemy” relationships with Amazon — at once trying to compete while at the same time using the company to offer the kind of delivery speeds consumers have come to expect.
“Marketplaces desperately want this problem solved for their merchants, because it drives more volume on the channel,” Gee said.
But one potential stumbling block for MCF will be Amazon’s continuing struggle to add extra capacity to its network quickly enough. The company has imposed strict stock level limits in its facilities, frustrating sellers who have had to make alternative arrangements. This limits how attractive MCF is to sellers, said Mounir Ouhadi from Thrasio, a seller acquisition company.
“We are selectively utilising it,” he said. “But without lifting those storage limitations, and streamlining getting an appointment to deliver that inventory, that’s not something that it is encouraging.”
When asked about MCF in a recent earnings call, Amazon’s head of investor relations Dave Fildes said the company’s primary focus this year would be to increase capacity for sellers on Amazon.com first. But he added investors should expect the company to “continue to see us look for ways to be able to innovate where it’s appropriate relative to the customer demand we’re already seeing in our network”.
Such expansions could prove unpopular as the company faces accusations of monopolistic behaviour, and concerns over working conditions. If MCF grows in popularity, it will become harder for consumers to avoid interacting with the company.
“I twisted myself into a pretzel to buy something without using Amazon,” one user wrote on Twitter in June. “I ordered from an independent site at about $3 more than Amazon’s price. It came in an Amazon box. How can I avoid that?”