Amazon to offer support services

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Amazon, the world’s largest online retailer, said on Tuesday it would start providing warehousing, delivery and other logistical support to small US businesses who sell on its websites.

The move comes as it battles Ebay, Google and Yahoo and others over the potentially lucrative sector.

The company also said it will also now offer design and support services to small businesses that want to set up their own privately branded retail websites, charging a monthly fee of just under $60 and commission of 7 per cent on each transaction.

The moves mark a significant extension of expertise that Amazon has developed with large retailers – and in particular with Target, the US discount store – to the army of over 1m small and medium-sized merchants who are registered to sell on the company’s website.

Joe Walowski, who manages Amazon’s fulfilment services, said that the provision of warehousing and shipping had been developed in response to customers who wanted to combine direct orders from Amazon with purchases from third-party merchants.

But the move also reflects Amazon’s wider strategic interest in establishing itself as a provider of web-based services, in parallel with its presence as a direct retailer.

Third-party sales, both by large retailers such as Macy’s and individual merchants, accounted for 29 per cent of its unit sales in its most recent quarter, up from 28 per cent a year ago, and are more profitable for the retailer than its direct sales.

In addition to providing warehousing, and order fulfilment, Amazon said it would also handle customer returns and refunds.

Mr Walowski said the company was aware of the potential challenges involved in the new services, but that its experience in dealing with larger customers “had given us the confidence to think that we can do this very well”.

He declined to give estimates of expected volume, or the likely profitablity of the new services. Shipments by third-party sellers who sign up for the warehousing and fulfillment service will be covered by the range of free shipping deals Amazon provides for its customers, he said, including its Amazon Prime fixed-fee shipping service.

Amazon began operating Target’s website in 2002, and the two companies this summer extended the deal until 2010.

Over the past year, Target.com has overtaken Walmart.com to become the second most popular US retail website after Amazon itself.

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