Seismic shift of economic power from retailers to logistics and carriers
EBay has barred sellers on its platform from using Amazon’s fulfillment service for delivery of their products, In an unprecedented move to prevent poaching of its customer base.
Amazon’s fulfillment business is a service where Amazon provides a warehouse logistics and delivery service and ships the products on behalf of sellers of any product from any online platform.
It is an increasingly popular service, especially for any individual website that sells its own products but does not have a reliable logistics and delivery service.
In the case of any online marketplace such as eBay, it is up to the individual seller in each case to dispatch the product following the online sale typically within two days. Therefore there would be a possibility of a seller choosing to use Amazon’s fulfillment service.
The problem for eBay is that if amazon is chosen by an eBay seller, Amazon will thereby gain access to the names and addresses of the buyers who use the rival online marketplace. Not only that, but it would give Amazon the opportunity to re-package and thereby re-brand the product as being a product delivered by Amazon even though it was sold on its competitor’s online marketplace. This would also have the spin-off effect of encouraging online buyers to utilise Amazon’s own online marketplace for a subsequent purchase especially with promotional information about Amazon’s online marketplace accompanying the product delivered by Amazon’s fulfillment service.
Online marketplaces like eBay, Amazon and Alibaba saw “massive growth” in 2017
According to the latest Inside Australian Online Shopping Report published by Australia Post covering the period 1 January 2016 to 31 December 2017,
- Australians spent $21.3 billion online last year
- One in every 10 sales could transpire online as early as 2020/21
- BNPL(Buy now pay later) payments accounted for 7.7% of total online goods spend in 2017
- 1 in 5 online purchases are now made from a mobile device
While 80 percent of eCommerce spending went to domestic retailers a bigger share of the total dollars went to overseas online sellers, especially Chinese sellers.
China based marketplaces like AliExpress, Alibaba’s online marketplace for consumers outside of china, were also the dominant global source for Australian-based buyers.
Power shifts from supermarket to the logistics database owner
As e-commerce operators grow in popularity and compete for business, there is a need to consider how to improve logistics and delivery services without potentially losing to a business developing its own rival database from the delivery fulfilling its orders.
Amazon offered the first online marketplace globally when it began its first Amazon bookshop more than two decades ago. In the meantime, other retailers tried but failed to establish an online presence because they did not have strong enough brand power or other drawcards to their website and therefore were unable to build up the necessary customer base plus sufficient engagement and momentum for generating and accelerating further transactions.
Others understand and adapted the early Amazon business model by establishing multiple channels for selling online and providing a market for buyers and sellers and third-party users. Brand attraction and engagement was the next stage in the process of online sales development. The subsequent developments have occurred in brands developing databases for creating online marketplaces. Part of this comes through logistics and delivery.
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