As the Chinese e-commerce logistics firm backed by Alibaba Group Holding Ltd seeks to expand despite losses, the latter's global rival, Amazon.com Inc, is focusing on improving its own distribution operations in the United States.
Amazon is speeding the delivery of U.S.B cables, smartphone screen protectors, cosmetics and other small, flat items in its continuing push against rival online marketplaces such as Alibaba that help overseas manufacturers and suppliers sell directly to U.S. shoppers. The Seattle-based e-commerce giant notified its merchants earlier this month that such items would now be delivered to Amazon Prime members within five business days, down from eight previously, according to an email obtained by Bloomberg.
That makes Amazon delivery of small, inexpensive items from China, for example, much faster than the two weeks to 30 days it can take using online marketplaces owned by Alibaba Group Holding Ltd, EBay Inc and Wish.com.
Amazon wants quick delivery, which has helped it dominate online shopping in the U.S., to further differentiate itself from competitors in cross-border e-commerce.
U.S. online shoppers will spend about $30 billion this year on cross-border transactions, a 10 percent increase from 2015, with China the leading source of goods purchased, according to a February report by EMarketer. An Amazon spokesman declined to comment on the delivery changes. The boost-logistics move comes two months after Amazon slashed shipping fees it charges merchants who sell items through a company's special program.
"I expect the small and light program to explode in volume," said Neil Ackerman, a former Amazon executive who started the program and now heads e-commerce initiatives at Mondelez International. "Wish.com and other marketplaces won't be able to compete with Amazon when it comes to speed or customer service."
Amazon continues to refine the small and light delivery system to blunt competition from rival marketplaces that help Chinese merchants ship directly to U.S. shoppers through the ePacket program. EPacket is an agreement between the U.S. Postal Service and China Post that provides Chinese merchants cheap access to U.S. shoppers on small packages weighing as much as 1.7 kg.
Chinese merchants selling on Amazon can ship orders through ePacket, meaning Amazon gets less money than if it had handled packing and delivery, and those sales take longer to reach customers.
Amazon pitches its quick delivery and proximity to U.S. shoppers to encourage Chinese manufacturers and suppliers to ship the items directly to the company's warehouses. Another incentive is to make the products Prime-eligible, which lets them reach Amazon's most loyal shoppers who pay $99 a year for delivery discounts.
By reducing the price of shipping such items and speeding their delivery, Amazon is looking to win both merchants selling the items and customers who want them quickly.
Amazon shoppers in the U.S. order tens of millions of units annually that fit the small and light dimensions, according to company documents reviewed by Bloomberg News.
Bloomberg contributed to this story.
