Amazon prepare to launch SWA (Shipping with Amazon)
Amazon are preparing to launch Shipping with Amazon (SWA) in Los Angeles before starting to roll it out across the US. Doubtless SWA will spread internationally soon after with the UK a prime territory for early adoption.
The news comes from the WSJ quoting ‘unnamed sources’ and they suggest that Amazon will roll out the service to third party merchants selling on Amazon to start with before making shipping services available to anyone and everyone.
Why the UK may see SWA sooner rather than later
In the UK, we already see Amazon collecting parcels from merchants under their Seller Fulfilled Prime programme. Rather than put products into Amazon’s warehouse, the seller keeps the stock in their warehouse and Amazon collect parcels on an ad hoc basis as they sell to deliver to customers. Naturally you’ll need to have processes in place but fulfilment companies like Trojan meet the SLA requirements for seller fulfilled Prime and offer an alternative to FBA for merchants who don’t qualify themselves.
We reported in August last year that Amazon had already grabbed a 7% share of the UK delivery market and to put that into perspective at the time Yodel had 8% with Hermes on 11%. The carrier with perhaps the most to lose will be Royal Mail, if Amazon offer attractive rates for small lightweight items traditionally sent by letter post.
What can we expect from SWA?
Shipping with Amazon will enable Amazon to offer the same delivery experience for products shipped from third party merchants as for Amazon retail or FBA products. When Amazon start to offer these services to business not selling on Amazon they too will likely be able to offer next day or even same day deliveries to customers.
Shares in many couriers including FedEx, UPS and Royal Mail all dipped a couple of percent when the news broke, so it would appear likely investors are spooked and it’s a sign of the power Amazon have. A new entrant to the traditional courier market unfettered with legacy technology and software will be a major threat to the carriers all rushing to modernise and personalise the delivery experience for consumers.
For retailers there’s naturally an expectation that rates offered by Shipping with Amazon will be highly attractive and if that proves to be the case then we can expect many merchants to trial the service early, especially if already selling on Amazon.
Would you use Shipping with Amazon?
If you already sell on Amazon then you will already use SWA for any products held in FBA. Some sellers also use SWA if they are on the seller fulfilled prime programme.
There are three main considerations for retailers when choosing a courier – Price, Service and Performance. Pricing is the key component although increasingly sellers want to offer services such as tracking, inflight redirection and have robust delivery confirmations. Performance is key – if a courier regularly fails to meet their promises then retailers will doubtless eye up alternatives. Amazon have the scale to offer price and service so the one remaining metric is performance.
Generally Amazon’s delivery promises are kept but they did struggle over the 2017 Christmas period with some late deliveries. Their network was operating at capacity and there were simply too many parcels in their network. This is an issue that all carriers face but one that is somewhat mitigated by scale. By massively expanding Amazon Logistics with ever more couriers, funded by revenues from new customers injecting parcels into the network, this may give Amazon the scale they need to offer even increased service to Amazon customers.
In the long term, choice of carrier will probably be ultimately decided on price – if Amazon offer a lower cost comparable service then retailers will likely be less concerned over the odd late or missed delivery.
Read our our article Why the launch of Shipping with Amazon is no surprise
Another excellent analysis on Amazon by Tamebay. It seems logical for Amazon to control the length and breadth of logistics for its business. Amazon,s whole business is centred around free and fast delivery and Amazon should control that, otherwise it is at the mercy of other couriers such as FedEx that can increase their prices at any time which would then effect Amazon,s profitability. It will take Amazon about 10 years and billions of dollars to build out a logistics company to rival FedEx or Ups. Aim high and start small and over the years it will get bigger and bigger where it will then become a competitor to the major couriers.
Shocking how much market share Hermes has got hold of tbh. Crazy !.
I use them but would not have expected that much !
We did look at fulfilled by prime a while ago and having Amazon ship all our stock, as we had it with Royal Mail. It was not cost effective and too expensive especially for international, plus the likes of eBay wont show Amazon as an actual logistics company.
Royal Mail deliver us the “price” but not the Performance and service (service is so poor).
Their is the moral thing about shipping with a company like Amazon to consider, I know this will not mean a lot to people, but we see the state of those drivers sometimes.
Companies like RMG do not seem to have a long term plan, we are only now getting delivery scans (which are a breath of fresh air) but this is the sort of thing that you would expect as standard with Amazon, and you will get it international.
Ultimately the service from RMG is simply not good enough for businesses like us, they simply cause to many issues and do not deal with them.
Also from a RMG shareholder point of view (we invested long term) we have not been impressed, they have had a monopoly a headstart and should be so far ahead of the rest with the growth of e-commerce.
First two pages of what we sell are chinese traders all more expensive than us.
So wonder whos going to be left to use this service.
We are on SFP programme, for non Prime customer orders Amazon use RM to deliver anyway so I’m not sure how that works for this.
The only issue is every year Amazon fall over at Christmas with sudden news that next day can no longer be achieved.
Be interesting to see how it pans out, prices are great for next day, rubbish for standard compared to RM we pay over £1 more per parcel than our RM parcels then Amazon send it with them anyway.