Amazon (NASDAQ: AMZN) is launching a delivery service whereby products are more readily available for faster delivery directly from sellers to customers. Sellers are said to be more inclined to use this service compared to others as Amazon sweetened the deal with low delivery costs, better logistics software and regular warehouse inspections.
This poses a challenge for competitors such as United Parcel Service Inc. (NYSE: UPS), and FedEx Corporation (NYSE: FDX), which provide similar service. However, Amazon still plans to use these delivery services as having different delivery options is better than relying on one, but Amazon will now get to decide how packages are sent rather than having the customer decide.
Initially, Amazon had announced that the delivery service was just a trial in October last year, but the company has realised that delivering packages on its own rather than depending on a third party is a more viable option and so far has seen the positive impacts it has had. Amazon will now be able to monitor deliveries right up until customers collect them. The company will also be able to save money through volume discounts, and since the delivery will be done directly from the seller’s warehouse to the customer, Amazon will no longer have to provide storage for the packages.
Amazon’s delivery service will also be beneficial to sellers as well. Amazon’s latest service, Fulfillment by Amazon (FBA), launched in 2006, allows sellers to ship their goods to Amazon warehouses for the company to process shipping when they come in. However, these sellers will be able to save money as they would not have to be paying Amazon the exorbitant storage and packing fees.
The company is finding innovative ways to increase and improve its service as they continue to expand their operation. Despite having a setback in its market price before releasing its earnings report, they are still one of the top tech stock on the market and we continue to recommend this stock to investors.
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