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What Became of Amazon’s Seller Flex?

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Feb. 8 2018, Updated 7:30 a.m. ET

Seller Flex now called FBA Onsite

In October 2017, news reports indicated that Amazon (AMZN) was testing a new delivery service known internally as Seller Flex. Seller Flex was described as a delivery program that fulfilled Amazon customer orders directly from the warehouses of merchants that sell goods on the e-commerce platform.

Updated reports indicate that Amazon is still testing the new delivery service in the US (SPY). The program is now called FBA Onsite.

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Simplifying fulfillment

If the FBA Onsite test is successful and the service is taken up by third-party merchants on Amazon, it could sharpen the company’s e-commerce competitive edge. Amazon’s existing fulfillment programs require merchants to send inventory to Amazon facilities and pay Amazon to store, package, and deliver orders to customers. However, the existing process can strain merchants’ resources and bottom lines.

Because FBA Onsite promises to simplify fulfillment, Amazon merchants could save on their costs and pass on the savings to their customers via lower prices.

Lower pricing fueling sales

Lower prices could help Amazon win over more shoppers, aiding its competition with the e-commerce rivals Walmart (WMT), eBay (EBAY), and Target (TGT).

Amazon merchants already use loans written by the company to discount their products, which allows them to make more sales. These merchants could increase their discounts if FBA Onsite allows them to cut costs.

Amazon receives commissions on sales that third-party merchants make on its site. The company’s revenues grew 34% year-over-year to $43.7 billion in 3Q17.

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