Faced with tough competition from rivals Alibaba Group Holding Ltd (NYSE:BABA), eBay Inc (NASDAQ:EBAY) and Wish.com, Amazon.com, Inc. (NASDAQ:AMZN) is depending on its Prime subscription service to woo customers with faster delivery.
The Seattle-based online retailer has notified various suppliers that sell light items – such as USB cables, smartphone screen protectors, cosmetics and other small, flat items – will be delivered to Amazon Prime members in 5 business days, down from 8 previous. The move was meant to push against competing marketplaces that help overseas manufacturers and suppliers sell directly to US customers.
Quick delivery has always been Amazon’s strongest suit. The online retailer has dominated the US online shopping market because of its fast delivery, enabling Amazon to distinguish itself in cross-border e-commerce. A report by digital research marketing firm eMarketer, showed that US online customers will likely spend about $30 billion on cross-border transactions this year, which is a 10% increase from last year. The report also noted that China is the leading source of merchandise purchased online in the US market.
Amazon’s push for faster delivery time comes two months after the e-commerce giant reduced shipping fees charged to merchants that sell items through the company’s ‘Fulfillment By Amazon Small and Light’ program. The program, which was introduced in 2015, provides free shipping with no minimum order size on thousands of popular small items that retails for $10 and below.
“I expect the small and light program to explode in volume,” said Neil Ackerman, a former Amazon executive who started the program and now heads e-commerce initiatives at Mondelez International. “Wish.com and other marketplaces won’t be able to compete with Amazon when it comes to speed or customer service.”
For added measure, Amazon is continuously working to refine its small and light delivery system to help Chinese merchants ship items directly to US shoppers via its ePacket program. The program is an agreement between U.S. Postal Service and China Post that provides Chinese vendors cheaper access to US shoppers on smaller items that weigh up to 4.4 pounds or 1.7 kilograms.
The agreement allows Chinese vendors selling on Amazon to shop via ePacket, which means the online retailer will get less money than “if it had handled packing and delivery.”
Amazon’s faster delivery offer is pitched to US shoppers to encourage Chinese manufacturers and suppliers to have their items delivered directly to the company’s warehouses. The online retailer is also offering incentives to make products Prime eligible. This offer lets Chinese vendors reach Amazon’s most loyal customers who pay $99 each year on delivery incentives.
By minimizing the shipping costs on smaller items and speeding up delivery, Amazon is hoping to win over merchants who sell the items and customers who need said items shipped quickly. Each year, US-based online shoppers order tens of millions of units of smaller items with light dimensions, according to company documents reviewed by Bloomberg News.