There was a big to-do when Amazon announced the U.S. launch of its new delivery experiment, Seller Flex, in October. According to Bloomberg, FedEx and UPS’s share prices dropped almost immediately, as many interpreted the retailer’s entry into delivery as a sign of the company’s eventual vertical integration.
The language around Seller Flex has since been tempered a little. Supply Chain Dive conceded that the new delivery service “may not be disruptive,” but added that “it is transformational” – and we agree with this assessment. Seller Flex is not a total replacement for third-party logistics. It changes the current dynamic whereby merchants on the Amazon marketplace choose the carrier that delivers products from the warehouse to the customer so that now Amazon makes that decision for them.
Still, the potential implications of this decision are enormous. Seller Flex gives Amazon the opportunity to:
- Establish near-complete control over its last-mile delivery operation.
- Increase the number of Prime-eligible products.
And that should make retailers and carriers alike very afraid.
Catering to the modern consumer
“The number of estimated Amazon Prime members exceeds France’s population.”
The number of estimated Amazon Prime members is greater than France’s 2017 population, thanks in large part to the two-day shipping perk. Modern consumers like prompt service, and they expect it at a reasonable price. Amazon provides both, and Seller Flex gives it the opportunity to possibly do that at a lower cost and for more of its products.
For retailers, this is concerning because it means the e-commerce giant extends its portfolio of products that can ship within two days. This helps Amazon compete more effectively against other innovating companies such as Walmart but also everybody else, including other brick-and-mortar chain stores, boutiques and e-commerce sites.
For carriers, the threat is more immediate. Many carriers may experience client turnover as Amazon restructures delivery infrastructure for third-party sellers that opt in for Seller Flex. And realistically, third-party sellers have every reason to opt into Seller Flex. If it mean two-day delivery and increased sales, they’ll gladly switch over, even if it’s at the expense of a long-time partnership with their existing carrier.
Speculatively, there’s also the “what if?” factor at play here. Maybe this really is the first step to the eventual launch of Amazon’s very own global transportation fleet. Only time will tell.
Regardless, in answer to the question posed in the title of this piece is yes. You should be terrified.
There’s still time to prepare
But not much. Amazon is planning an at-scale launch of Seller Flex in 2018. Again, this doesn’t necessarily change anything about Amazon’s specific offerings, but it has potential to make the company much better at what it already does: Deliver a consistent customer experience.
As of now, there is only one suitable way to prepare for Seller Flex: Do it first.
Retailer or carrier, you must unify your last-mile delivery management under one console. We’re talking about a single solution that provides complete visibility and control into downstream operations, which is what Amazon is working toward with Seller Flex. Incidentally, it’s also what nuDeliverIt’s mobile delivery tracking software is all about – unification of delivery-tracking data in one location, viewable on a simple mobile interface.
The clock is ticking, so you better start clicking.