Amazon begins service to pick up non-Prime shipments in three cities and deliver to destinations

Amazon.com, Inc. (NASDAQ:AMZN) has begun a program in which it will pick up customer goods at warehouse locations in three cities and deliver them to their final destinations within five days, according to a newsletter from a media research firm that follows the Seattle-based e-tailer.

The newsletter from TJI Research reported yesterday that Amazon is inviting merchants who already sell on the company’s site to participate in the program. The service involves shipments not ordered through Amazon’s “Prime” delivery service, which guarantees two-day deliveries for orders placed on the company’s website. The founder of the Denver-based publication, Justin Smith, said it is his understanding that the merchants currently use other delivery services. The originating cities are New York, Chicago and Los Angeles, but the destinations are nationwide, Smith said in an interview today.

Smith said he is unclear if Amazon is delivering the goods directly from shipper warehouses to the end customer, or if the shipments are being re-routed through Amazon’s fulfillment centers. He also is unclear if Amazon plans to expand the service’s footprint, though he surmised that it is part of its broader plan. Smith started his newsletter in 2018. Smith said he has been following Amazon’s various initiatives for a number of years.

In a statement yesterday, an Amazon spokeswoman said the company is “always working to develop new, innovative ways to support the small and medium businesses who sell on Amazon, including testing shipping programs that help these businesses get packages to their customers quickly and reliably.

The latest move is another step in Amazon’s strategy to develop an in-house transportation and logistics network designed to transport orders placed directly from its website, and from merchants enrolled in the company’s “Fulfillment by Amazon” service, in which the company offers website exposure, warehousing, fulfillment and deliveries. It is expected that Amazon will attempt to divert deliveries to its own network from its carrier partners. Currently, Amazon delivers about 10 percent of its own traffic, according to data from consultancy ShipMatrix. The U.S. Postal Service (USPS) handles about 62 percent of Amazon’s traffic, UPS Inc. (NYSE:UPS) between 21 and 26 percent, and FedEx (NYSE:FDX) about 8 to 10 percent, ShipMatrix said.

Over the long-term, though, the biggest concern for rivals is that Amazon will pursue freight that never touches its website, effectively competing with established players for all the parcel, truckload, less-than-truckload and intermodal traffic moving in the U.S., as well as international traffic entering the country

Amazon uses its network primarily to transport time-sensitive “Prime” shipments. However, it is believed to rely on partners to deliver non-urgent shipments. In that vein, the TJI Research disclosure is a new front in Amazon’s delivery strategy.