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Amazon’s Seller Flex: Could It Take Control of Delivery System?

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Amazon testing Seller Flex on the West Coast

On October 5, 2017, Bloomberg reported that Amazon (AMZN) is testing a new delivery system called Seller Flex on the West Coast of the United States (SPY). The report said that Amazon declined to comment on the story and that Bloomberg learned about Seller Flex from unnamed people familiar with the plan. It’s typical of Amazon to decline to comment on leaks about its business plans.

According to the report, Seller Flex involves Amazon picking up packages from warehouses of third-party sellers on its online marketplace and then delivering the packages to customers’ homes.

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Reducing delays

Seller Flex’s strategy signals a departure from Fulfillment by Amazon where sellers have to bring their packages to Amazon warehouses for delivery to customers.

Amazon and merchants in its marketplace rely on courier companies such as FedEx (FDX) and United Parcel Service (UPS) for most of their package delivery operations.

But for Amazon, the experience has not always been good. In the past holiday season, the company was forced to refund shoppers after their packages failed to arrive in time because couriers were overwhelmed by delivery demands. Those refunds meant lost revenues and profits for Amazon.

Seller Flex could be a program that could cut delivery time and contribute to Amazon’s goals of wooing shoppers with faster delivery.

A speed boost

Seller Flex could cut Amazon’s delivery time and contribute positively to Amazon’s competition with eBay (EBAY) and Walmart (WMT) in an industry where delivery speed is reshaping the game.

Recently, eBay and Walmart tried to bolster their own delivery operations. Walmart, for example, said in June that it was testing a shipping method that would involve employees delivering customers’ orders on their way home.

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