Amazon is working with merchants to boost the number of Prime-eligible offerings not distributed by the eCommerce giant.
Re/code reported last week (May 14) that Amazon is working with “select group” of sellers to bring more of their products to one of its strongest customer bases. Amazon’s lure is that the goods can qualify for two-day shipping – even though the inventory need not be stored with Amazon in one of its warehouses.
The move may represent a shift in Amazon’s policy that sellers participate in the Fulfillment by Amazon program, through which warehouse storage is mandatory in order to qualify for the two-day Prime delivery option.
By relaxing those terms, Amazon will be able to expand the number of products that can be sold through Prime – and add higher priced items from sellers who have not wanted items residing in Amazon’s 100 centers around the globe so that they can sell those higher priced goods to other retailers, or avoid passing sales taxes on to consumers, Re/code reported.
Prime members are said to spend two to four times as much as their non-Prime brethren. And Amazon has been capitalizing on the spending by investing in plans to broaden free video, photos and streaming content to members as more perks for its Prime members.
The most recent public data about Prime from Amazon was that it had gained 10 million new Prime members during the holiday season (estimated to have 40 million total), but Amazon hasn’t provide an update since. Recent data from Consumer Intelligence Research Partners show that Amazon Prime members outspend non-prime members 3-to-1. It’s also estimated that 45 percent of Amazon users are Prime members. The $99-a-year service now offers free two-day shipping on a total of 33 million physical and digital products, including 13 percent of Amazon’s physical inventory.
Amazon’s leap into this new program has shown the value Amazon has placed in its third party merchants. The eCommerce giant said in January that third-party merchants were responsible for 2 billion items sold in 2013, which was twice as many as in 2013. In Amazon’s most recent first quarter earnings, Amazon CFO Tom Szkutak indicated that its seller business accounts for “44 percent of our units today” in terms of sales figures. He also noted the value its third-party merchants bring to Amazon’s customers.
Thus far it isn’t clear how many merchants have signed on to the new program, nor how Amazon will ensure timely delivery of items not shipped from its warehouses, The Wall Street Journal reported last week.