Earlier today a reader contacted me with some very interesting information on a pilot that Amazon is testing currently. The contents of the communicated has been redacted to protect the identity of the source but a few things are clear to me.
One – Prime is becoming more important for Amazon to combat the impact that Google will have on their business and bottom line. Being able to provide a standard Amazon experience to all shoppers and then leverage Prime to enable more transactions just highlight just how valuable Prime is for the Seattle company. Amazon Prime is the worlds greatest loyalty program.
When Bezos and co create a revenue generation opportunity via a new investment or feature it is to be leveraged multiple times to recoup that investment. This very factor makes me realise just how far Amazon is in front of their competition. Think of it as Lean Startup meets Walmart.
The pilot in some more detail:
FBA 2013 Elastic Fulfillment Pilot Program
Thank you for your interest in the FBA (Fulfillment by Amazon) 2013 Elastic Fulfillment Pilot Program. If you choose to participate in this pilot, the following terms will apply:
• This pilot runs from the [redacted] until October 14, 2013.
• You will receive a discount of $1.25 from our standard FBA fulfillment fees for each eligible unit you sell through FBA during the pilot with an item price at or below $5.00 at the time of sale. You can sell the item at any price, but to receive the $1.25 discount, it must have an item price at or below $5.00 at the time of sale.
• You may remove products in the pilot program from our fulfillment centers at any time. If you create a removal order for these products before [redacted] to have them returned to you, you will receive a discount of $0.25 from our standard removal fee for each eligible unit. Any units removed after this date will be charged our standard removal fee. If you do not remove the products, they will automatically enroll into our standard FBA program and fees.
• The combined dollar amount of any unpaid discounts earned in connection with the pilot will be deposited to or used to offset any negative balance in your Amazon seller account periodically (e.g., every two weeks). Alternatively, we may elect to apply the discounts at the time the applicable fees are charged to your account.
• We reserve the right to end your participation in this pilot or change the terms of this pilot at any time.
Who is the biggest winner here? Amazon and the customer. The customer has the item they desire at the price they want in their hands inside 36 hours.
Amazon wins due to it being able to charge their third party merchants a FBA fee plus it makes revenue from the original Prime membership. This pilot I sense will have the effect that third party merchants can provide a service that is more consistent than what is seen on eBay etc. Consistency, Refactor are both words in the Bezos operational guidelines.
What is the end game here? It is Amazon which means they are testing the impact of adding a layer on to FBA.