Amazon tests new third party seller program; broadens scope of goods offered with the Prime tag

By

Arati Menon

Published
Jan 30, 2018

Amazon is testing an expansion to its third-party seller service that will allow more items to be eligible for quick delivery directly from merchants. Third-party sellers will now be able to house merchandise in their own warehouses and ship direct to consumer.
 

According to a Bloomberg report, the newly christened FBA Onsite is Amazon’s latest attempt at making more products available for free two-day delivery, whilst also helping to relieve the strain on the company’s overcrowded warehouses.
  
This is an amended version of an earlier program for third-party sellers called Fulfillment by Amazon that allowed third-party merchants to send inventory to Amazon warehouses and pay Amazon to dispatch them like first-party Amazon merchandise using delivery partners like UPS and FedEx.
 
With the new program, Amazon is using warehouse software to help third-party sellers with the logistics of their own warehouses. It includes packing and shipping recommendations to enable third parties to act like Amazon's own back-end operations, and meet the stringent standards that Prime guarantees customers.

Many of those merchants used to pay hefty fees to have Amazon handle logistics so that their products would be eligible for free two-day shipping through the Amazon Prime membership program. A Prime member is probably more likely to convert to sales on an item marked with a Prime tag, which carries the two-day shipping guarantee.

The amendment pushes logistical control and costs back into the hands of merchants, while Amazon offers lowered delivery costs along with inspections and recommendations.
 
As of Q3 2017, 50 percent of paid units on Amazon were sold by third-party sellers, according to a recent report published by Statista. Seller-service revenues account for the second-largest revenue segment of the online retail platform, after retail product sales.