Amazon is shaking up its delivery dice once again to roll out a new “Ship by Region” program, which will put more money in the merchant’s pocket but may cut down the number of Prime-eligible products for consumers.
The new program, which Amazon is currently testing, has been designed to let merchants decide the Prime eligibility of products based on the distance of delivery. So, for instance, a pair of rollerblades being shipped out of Austin, Texas, might only be eligible for free, two-day Prime delivery in the surrounding four states and not for someone ordering out of Chicago, Illinois.
While fewer Prime products might not sound like the ideal business plan for Amazon, the company, nevertheless, seems bullish on the test program as it argues that it will allow merchants to ship more items through Prime.
Until now, for retailers to provide Prime benefits on a product, they were required to send it to the Amazon warehouse, which is where the product would get shipped to the customers’ doorsteps. But with the new expanded model, Amazon is letting retailers ship the Prime products right out of their own warehouses, thereby saving on shipping costs and motivating merchants to label more products as Prime.
In many cases, shipping out certain products across the country can cut deep into merchants’ profits, Amazon spokesman Tom Cook told CNNMoney. This, Amazon believes, would also encourage merchants to ship more free items, which they would have otherwise charged for.
Even though reduced shipping costs may help merchants put out more Prime products, it would also imply slower shipping for products, which were once Prime-eligible but not anymore.
Since the introduction of the program, merchants are seeing a rise in sales, said Amazon marketplace VP Peter Faricy in an interview with The Wall Street Journal.
The program is yet another approach Amazon is taking to boost Prime membership appeal for consumers and merchants. Amazon recently added features like free e-books, music streaming and exclusive sales at no extra cost for its Prime members.
For more on omnichannel trends, click here to take a look at the Vantiv Omnicommerce Tracker powered by PYMNTS, a monthly recap of the developments within the omnichannel ecosystem.
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