Amazon will allow other merchants to use its Prime service to deliver goods.
The new service, Buy with Prime, lets third-party merchants use Amazon's vast shipping and logistics network to fulfill orders on their own sites, while also appealing to Amazon's 200 million-plus Prime customers.
These websites will be able to put the Prime Badge on their websites next to items that are eligible for free two-day or next-day delivery. Prime members will use their Amazon account to place an order.
Buy with Prime won't be free for sellers, and pricing will vary depending on payment processing, fulfillment, storage and other fees.
The service will only be available to sellers who use Fulfillment by Amazon. Merchants pay for that service to have their inventory stored in Amazon's warehouses and to use the company's supply chain and shipping operations. It will be extended to merchants that aren't selling on Amazon.
Amazon wants to be the fastest in online delivery. For years, the company has reinvested profits back into physical expansion, growing its fulfillment centers and shipping partnerships across the country in order to offer two- and same-day delivery in more markets. It has a large fleet of delivery drivers, trucks and planes.
Industry watchers have paid close attention to Amazon's growing in-house logistics operations, speculating that it aims to compete with major carriers like FedEx and the U.S. Postal Service. Dave Clark, Amazon's CEO of worldwide consumer, told CNBC last year that Amazon is on track to become the nation's largest delivery service by early 2022.
Some orders for products sold on other websites are handled by the company. Multi-Channel Fulfillment is a program that lets sellers store and ship products using Amazon's services regardless of whether they are selling on the home site.
Amazon stopped offering a service where its drivers picked up packages from retailers and delivered them to consumers at the beginning of the coronaviruses epidemic as it became overwhelmed with online orders.
Bob O'Donnell, founder and chief analyst at Technalysis Research, said that Buy with Prime could grow into a lucrative service for Amazon over time.
One of Amazon's most successful businesses was started as an internal tool.
They have built a huge logistics business initially for their own purposes and now they are starting to leverage that as their own service.
Amazon has turned its massive shipping and logistics operations into a cash machine. Amazon reported that third-party seller services, which includes commissions, fulfillment and shipping fees, along with other services, grew 11% year-over-year to $30.3 billion in the latest quarter.
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