The Amazon Effect   /   November 13, 2020

How Amazon’s fulfillment options help expand its control over Shopify and Etsy

Amazon isn’t satisfied with handling logistics for its own products — it wants to control orders on platforms like eBay, Etsy and Shopify, too.

For several years, Amazon has offered a program called Multi-Channel Fulfillment, which lets sellers take advantage of Amazon’s fulfillment services even when they aren’t selling on Amazon.com. Many sellers use it to fulfill orders on their Shopify stores or on third-party marketplaces like eBay or Etsy. It’s a sweet deal for the sellers, who don’t have to think as much about shipping and warehousing, and for Amazon, which gets to profit even from non-Amazon orders.

But it came with a big downside: Amazon used to ship all Amazon-fulfilled products in an Amazon-branded box — even when those orders came from another marketplace. Anyone who has bought from Etsy and received an item shipped, inexplicably, in a box with Amazon tape probably has been on the receiving end of a MCF order. But since the summer, as Amazon tries to get even more sellers on board with MCF, it has — on an invite-only basis — started to roll back that restriction. Now Amazon will process an Etsy or eBay or Shopify order in a blank, unbranded box.

Such a cosmetic change might not sound like much. Yet the shift not only makes MCF more appealing to sellers on the branding level — they won’t be confusing their customers with an Amazon-branded package — but it also helps Amazon expand its reach over the e-commerce logistics system without drawing too much attention to itself. It also could pose a significant threat to Shopify, which is building out its fulfillment network as it positions itself as an alternative to selling on Amazon.

For now, the new MCF feature seems focused on smaller brands that sell in multiple marketplaces. Mitul Patel, an Amazon seller who also runs his own Shopify store, said he first joined the program around 2016 because of the ease of shipping all of his products to the same warehouse. At one point, he’d tried to fulfill his Shopify orders through a third-party warehouse, but having to keep two warehouses fully stocked with inventory became a hassle. “It’s a lot easier to send everything to Amazon and let Amazon do the fulfillment,” he said. “You don’t have to have multiple warehouses. You just let Amazon handle that. And they’re really good at it.”

MCF, however, is costlier than most third-party warehouses — in general, MCF charges $40 a month, plus a host of shipping and selling fees that vary based on the size and weight of an item — but the convenience could make it worth it for many sellers. (The blank box feature does not appear to cost extra.)

There seems to be a bigger agenda at play with the program. Since the blank box program was announced in July, some experts have pointed out that the move seems to be a shot in the direction of other up-and-coming e-commerce giants. Notably, it’s coming right as Walmart and Shopify race to build out their own fulfillment networks. By making it easier for sellers to use Amazon fulfillment services even while selling through other channels, Amazon is cementing its status as e-commerce’s centrifugal force.

It’s unlikely that Amazon MCF will ever account for a large portion of the fulfillment on online retail marketplaces like Walmart.com — in large part because Walmart has outright banned sellers from using Amazon’s fulfillment services. The blank box program might make Amazon’s fulfillment reach more subtle, but a box alone won’t stop Walmart from sleuthing out third-party sellers who break Walmart’s rules. Walmart can still find — and suspend — sellers who use Amazon Logistics codes in their orders.

On Shopify, however, the threat is more magnified. The company has expanded its fulfillment network as a way to grow out its ecosystem — much in the way Amazon has. It’s an easier option for brands that want to be DTC only. But if merchants feel — as Patel does — that managing multiple fulfillment systems is too complicated, few are likely to choose Shopify over Amazon. If the blank box option becomes more widespread, it could be used to undercut Shopify’s fulfillment growth.

The tweaks to MCF hint that Amazon has increasingly come to view itself as not just an online marketplace, but a fulfillment company. “Within its overall fulfillment network, in the last several months, it’s been rapidly expanding, and they’re really trying to own more of that process from start to finish,” said Rachel Dalton, an e-commerce analyst at Kantar. “They’re competing with the FedExes and UPSs and the Postal Services. They’re not as big, but they’re up there.”

Amazon has rapidly grown its logistic networks this year, including in rural areas where it traditionally relied on the US Postal Service for help. If the blank box program is any indication, those expansions are not just about making shipping more efficient for Amazon sellers but for expanding its overall e-commerce footprint.

In doing so, it makes it even harder to ignore the e-commerce giant. In a world where Amazon controls much of online logistics, even consumers who want to avoid shopping at Amazon might still end up benefiting from the corporation’s massive reach.

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