We use cookies to provide you with a better experience. By continuing to browse the site you are agreeing to our use of cookies in accordance with our Cookie Policy.
  • INDUSTRY PRESS ROOM
  • SUBMISSIONS
  • MEDIA FILE
  • Create Account
  • Sign In
  • Sign Out
  • My Account
Free Newsletters
  • MAGAZINE
    • Current Issue
    • Archives
    • Digital Edition
    • Subscribe
    • Newsletters
  • STRATEGY
  • GLOBAL
  • LOGISTICS
  • MANUFACTURING
  • PROCUREMENT
  • VIDEO
    • News & Exclusives
    • Viewer Contributed
    • CSCMP EDGE 2023
    • Upload your video
  • PODCAST ETC
    • Podcast
    • White Papers
    • Webcasts
    • Events
    • Blogs
      • Reflections
      • SCQ Forum
    • Mobile Apps
  • MAGAZINE
    • Current Issue
    • Archives
    • Digital Edition
    • Subscribe
    • Newsletters
  • STRATEGY
  • GLOBAL
  • LOGISTICS
  • MANUFACTURING
  • PROCUREMENT
  • VIDEO
    • News & Exclusives
    • Viewer Contributed
    • CSCMP EDGE 2023
    • Upload your video
  • PODCAST ETC
    • Podcast
    • White Papers
    • Webcasts
    • Events
    • Blogs
      • Reflections
      • SCQ Forum
    • Mobile Apps
Home » Study: Amazon's FBA Onsite program poses a threat to 3PLs
Forward Thinking

Study: Amazon's FBA Onsite program poses a threat to 3PLs

May 1, 2018
Supply Chain Quarterly Staff
No Comments

As e-commerce colossus Amazon.com Inc. continues to roll out new logistics service offerings to support its rapid growth, one of those services, called Fulfillment by Amazon (FBA) Onsite, may eventually pose a threat to some of the third-party logistics providers (3PLs) that now partner with Amazon, according to a report released Thursday.

While Amazon is a major user of 3PL services itself, the company has consistently expanded its own 3PL service offerings to merchants through a series of partnerships, acquisitions, and technological applications, according to the report from Milwaukee-based market research and consulting firm Armstrong & Associates Inc.

"We predict that its continued growth—in the form of third-party sales, international expansion, and new product categories—will cause Amazon to present increasing competition to 3PLs. This is especially true for its Fulfillment by Amazon business," Armstrong said in its report, "E-commerce Logistics in the United States: Domestic and International Transportation, Warehousing and Fulfillment, Last-Mile Delivery, and Reverse Logistics."

In the latest example of this expansion, Seattle-based Amazon rolled out its FBA Onsite product to select merchants. The company invited them to ship products through FedEx Corp., UPS Inc., and the U.S. Postal Service at Amazon's deeply discounted bulk rate. In return, sellers would have to dedicate floor space Amazon inventory and install Amazon's warehouse management system (WMS) software in their own DCs, it has been reported.

Amazon has provided no public information on the program, and declined to comment on the study.

Though FedEx and UPS stock prices initially fell on the news, the carriers' networks have such massive size and scale that they will not be seriously harmed even if Amazon uses its increased volumes to negotiate lower prices, the Armstrong report said. "Rather than being a threat to parcel carriers, FBA Onsite exerts a more significant impact to 3PLs working with third-party Amazon sellers. Its recent reported efforts to enlarge its shipper base also hint at the company's interest in expanding its role as a logistics provider," the report said.

In the meantime, Amazon's market share continues to increase. The e-tailer's U.S. business-to-consumer (B2C) e-commerce market share is currently estimated at 43 to 44 percent, meaning that sales through Amazon account for about 4 percent of all retail in the country, the report said. By continuing its pilot of FBA Onsite and preparing for a reported nationwide rollout in 2018, Amazon could consolidate its control over that hefty share, and accentuate its dual roles as both an e-commerce retail and logistics powerhouse, the Armstrong report said.

Logistics
    • Related Articles

      3PLs, last-mile fleets partner to tackle ‘Amazon Effect’

      Amazon says it shipped a billion items via Prime network over peak

      Stricken by pandemic, 3PLs and their shipper customers look to strategic relationships and “nearshored” supply chains

    Recent Articles by Supply Chain Quarterly Staff

    Report: hackers target third-party suppliers in automakers’ supply chains

    Maersk invests in fuel cell maker to decarbonize its ships

    Logistics Plus arranges gas pipe delivery to war-torn Ukraine

    You must login or register in order to post a comment.

    Report Abusive Comment

    Most Popular Articles

    • Walmart to open fifth “next-gen” fulfillment center in 2026

    • 53% of procurement leaders expect to increase their spending in 2024

    • U.S. faces permanent labor shortage, says University of Tennessee economist

    • Pepsi exec highlights four key structural changes in the supply chain

    • What skills will you need in the Age of AI?

    Featured Video

    Edge2023 innovationtheater here technologies

    CSCMP EDGE 2023 Innovation Theater: Enabling Peak Performance in Last-Mile Delivery Through Private Mapping and Custom Routing - HERE Technologies

    CSCMP EDGE 2023
    At HERE Technologies, we understand the hypercompetitive world of e-commerce, retail, and parcel delivery is increasing in complexity every day. End customers demand ever-increasing delivery performance levels regarding on-time arrivals, flexibility in delivery schedules, pricing and payment options, and more....

    FEATURED WHITE PAPERS

    • Balancing Act: How Freight Brokers Help Shippers Navigate Uncertainty

    • Quarterly Freight Data Report: Q3 2023

    • A Brighter Future: How COVID-19 Continues to Change Freight Procurement Strategies for the Better

    • Five questions to ask before electrifying your indoor forklift fleet

    View More

    Subscribe to Supply Chain Quarterly

    Get Your Subscription
    • SUBSCRIBE
    • E-NEWSLETTERS
    • ADVERTISING
    • CUSTOMER CARE
    • CONTACT
    • ABOUT
    • STAFF
    • PRIVACY POLICY

    Copyright ©2023. All Rights ReservedDesign, CMS, Hosting & Web Development :: ePublishing