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Amazon’s Latest Logistics Offering Presents Another Challenge to Major Shippers

Amazon is testing a warehouse management system called FBA Onsite intended to help sellers more efficiently pick, pack, ship and manage their inventory, Sourcing Journal has learned.

FBA Onsite is said to be a software that helps sellers manage their warehouse processes so they can better meet the rigorous requirements of the Amazon Prime customer promise. Sellers receive on-site support to assist with software setup.

Those tapping into FBA Onsite will be required to use expedited shipping services to meet Amazon’s Prime customer promise and can expect to see minimal, if any, change in their average transportation rates for these services. FBA Onsite packages will be delivered by existing carriers that support Amazon, even though some reports said Amazon was prepared to encroach on some of the turf handled by carriers such as UPS and FedEx.

Amazon hasn’t officially launched the service nor is it releasing its details publicly, but according to an invitation sent to sellers, FBA Onsite was described as a “groundbreaking” program that combines the best parts of its existing fulfillment programs.

[Read more about Amazon’s innovations: Amazon’s High-Tech, Self-Checkout Store is Open for Business]

The invitation also notes that the program should be considered a “work in progress” as Amazon will continue to refine the process based on user feedback. The program will apparently help Amazon with warehouse congestion by using storage space owned by third-party sellers on the platform rather than just building out more fulfillment centers.

For the sellers, FBA Onsite would help save on shipping as they no longer have to get their inventory to Amazon’s warehouses. Amazon is also offering much lower shipping rates for two-day delivery by letting the sellers take advantage of the low rates Amazon gets from shipping companies.

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Amazon currently offers Seller Fulfilled Prime, which lets sellers ship Prime-eligible products directly from their own warehouses — but without the benefit of low shipping rates. It also offers Fulfillment by Amazon, where sellers send their inventory to Amazon’s warehouses and use the company’s logistics system.

On the Amazon Services Sellers Forum, a post last month shared an introduction that said: “You have been selected from a small group of sellers that are optimized to benefit from FBA Onsite. This groundbreaking program offers the best parts of Fulfillment by Amazon and Seller-Fulfilled Prime. Your inventory remains in your facility and orders are fulfilled through Amazon’s transportation network.”

“Here are a few of the advantages with FBA Onsite: A Nationwide, two-day Prime offer for a flat fulfillment rate, fast and easy set-up with Amazon’s FBA Onsite, and immediate, no-cost inventory receipt and removal.”