If Amazon owns nearly half of the $513 billion U.S. ecommerce market, why the need to offer one-day free delivery? The key to this decision is Amazon’s singular obsession with customer centricity and an appreciation for indirect results that don’t even register on the radar of some competitors.

If Amazon owns nearly half of the $513 billion U.S. ecommerce market, why the need to offer one-day free delivery? The key to this decision is Amazon’s singular obsession with customer centricity and an appreciation for indirect results that don’t even register on the radar of some competitors.

Insights abound for those able to get past the headlines. Here are three of the most important takeaways that were either overlooked or under-covered in the media frenzy.

• Rock the Customer Experience or Die
• ROI Needs a Radical Rethink
• Double Down on Innovation, Play to Your Strengths

With the expenses involved in offering free shipping, it’s not hard to see why Amazon’s annual shipping bill is set to exceed $7 billion dollars according to the latest estimates. Retailers often opt to pass these costs on to their customers or offer ecommerce order fulfillment options that won’t leave them substantially in the red, but they’re missing the point.

Read the full article here.

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Coopetition is the act of cooperation between competing companies with partial congruence of interests to gain advantage by cooperation and generating more value by working together.

Coopetition is the act of cooperation between competing companies with partial congruence of interests to gain advantage by cooperation and generating more value by working together.

Amazon makes up most of the US ecommerce sales. However, they rely heavily on 3rd party sellers. These sellers experience major pain related to ecommerce order fulfillment cost and time. It can be a challenge to meet the fast shipping demands of customers with 1-day and 2-day shipping costs nationwide cutting deep into profits.

Fast shipping is now an expectation, but it is expensive for most sellers. Sellers often limit fast shipping to very small items or to local addresses. This limits their Amazon buy box opportunities.

This presentation highlights how Sellers can save time and money on shipping by using strategic coopetition – a concept that has been around for centuries

Coopetion in Ecommerce Order Fulfillment from Cahoot Ecommerce Fulfillment

ANCIENT ROME HAD A LENDING PROBLEM

Rome offers a great example of coopetition strategy. Once upon a time around 3^rd Century BC, Roman Empire was immensely extended.

At this time, the 4 most lucrative business activities were: renting buildings, agriculture, lending money and maritime trade. The two last activities were closely linked because in order to engage in a trading business, one needed capital, which meant the need for borrowing money. Transport of goods on land for more than tens of kilometers were not feasible because of high costs and the material conditions to mobilize. Trade (especially maritime trade) had greatly contributed to the development of Rome and its Empire.

During this period of Roman antiquity, the organization of trade was significantly similar to ours, with mostly small businesses. Profession of maritime merchant at this time could be defined as a wholesaler activity. First, they had to purchase goods to sell it afterwards, hence the need to borrow money

But, long distance trade suffered from lack of information until the invention of telegraph. There was uncertainty all along the journey because no information was transmitted until goods’ final delivery. Hence, Landlords didn’t practice long distance trade, they sold their own products to local merchants who exported it afterwards. These merchants operated free markets and were in competition locally because “when several merchants sell the same products in the same area and there is formation of prices, there is competition”

Rich senators and landlords divided their wealth in two activities, on the one hand agriculture and on the other hand individual loans. Lending money was a very profitable activity and maritime loan was the most profitable but riskier. Its reimbursement rate was very low because of a very high level of defection, scams and many malice acts during Republic times. Being a landlord was honorable whereas being a merchant wasn’t. Tradespeople suffered from a very bad reputation. This resulted in a major lending problem at the time.

Around the 3^rd century BC, a rich landlord and a senator by the name of Caton, wanted to diversify his investments, and wanted to have more lucrative loans by mitigating his risks. So, he invented a concept of collective loan. To ensure reimbursement of loans, Caton asked his borrowers (the merchants in this case) to form an association. They had to create a society by assembling enough colleagues to gather fifty merchants and fifty ships. He would then loan the money to the group instead of an individual member. Caton allocated loans to a large number of ships, thereby reducing the risks of maritime incidents. He started the activity of collective maritime loan, comparable to modern concept of microcredit. This society worked following a principle of auto-selection and auto-management. Borrowers were therefore linked together and each had a part of responsibility, which established a social pressure on them. So, the merchants cooperated, via this common association. This collective loan had a fixed and high rate. This didn’t only decrease maritime risks, but also the one linked to borrowers’ disloyalty.

These loans allowed merchants to purchase goods, then they repaid it after having sold these goods. Collective loan is the first activity of collaboration between merchants during maritime trade process.

After having purchased their goods, merchants cooperated on another activity: sea freight. Acts of fraud and piracy occurred very often during Roman Republic, and also loss of goods due to weather related hazards. A shipwreck represented a terrible economic loss.

Facing these uncertainties related to navigation conditions and to avoid the complete loss of goods, merchants divided their total quantity of goods on various ships. This divided risks of loss of cargos due to maritime incidents or deliberates acts.

Second, transport of goods by sea were long and expensive. The higher the tonnage was and the cheaper the freight was, which motivated the merchants to fill boats for deliveries by joining forces. It was possible to rent space on a boat of another competing merchant. It did not make financial sense for each merchant to send ships with sub-optimal load to the same destination, hence these competing merchants came together to follow the “common freight for a journey” principle which was win-win for all of them.

With many owners for the same freight, risks were divided; the effect is the same as the one about the association imposed by Caton to his borrowers. It is an act of safety which needs many actors and transactions.

Romans combined cooperative and competitive activities in the trading process:

1. In the first activity of the value chain, to get collective loan, merchants cooperated via an association asked by the lender (Caton). Cooperation was not only informal but was institutional. Merchants were linked together via the association’s management, which imposed to them a social pressure, diminishing loan default risks.
2. Once funding is obtained, in the second activity of the value chain, merchants were rivals to purchase goods from suppliers at the best price. Loan obtained collectively allowed them to purchase goods individually, without any form of cooperation.

4. Into the third activity of the value chain, related to ship freight, merchants cooperated to minimize risks of cargos’ loss due to sea accidents or deliberate acts of piracy. Social pressure stayed strong but wasn’t institutionalized as for collective loan. This was the result of merchants’ deliberate strategy due to strong economies of scale in this activity of the value chain. Transportation costs greatly decreased when cargos’ burden increased, which made collective freight very profitable.
5. For the last activity of the value chain, once goods arrived at their destination, merchants ended any form of cooperation and sold their goods individually. Rivalry was very strong to sell their goods to the same consumers.

HIGH TIDE LIFTS ALL BOATS

The entire system benefitted:

• Commerce was a major driver of the Roman Empire and of wealth
• Maritime commerce one of the most profitable forms of commerce
• As coopetition increased the maritime merchants position improved, and so did the Empire’s.

WHAT IS COOPETITION

Coopetition is the act of cooperation between competing companies with similar interests to gain advantage by cooperation with the goal of generating more value by working together compared to the value created without interaction.

Coopetition is “the dyadic and paradoxical relationship that emerges when two firms cooperate in some activities, such as in a strategic alliance, and at the same time compete with each other in other activities” (Bengtsson and Kock, 2000, p. 412).

Think of it as “firms collaborating in order to increase the size of the business pie, and then compete to divide it up.”

Roman merchants used coopetition since the beginning of the 3^rd century BC. Hence, Coopetition is not a modern strategy driven by the double race to globalization and technology, which began at the beginning of the 1980’s. However, many major examples of coopetition are identified from the 1950’s. Driven by public policies in Japan, and in Europe, coopetition is responsible for many industrial successes.

STRATEGIC COOPETITION BENEFITS

Grow Current Markets

In 2004, rivals Sony and Samsung joined forces to build a LCD manufacturing facility in South Korea in order to better compete against LG and Phillips. Partly because of the new factory, the average price for LCD televisions that are 40 inches or larger fell from about $8,000 to $1,500

Gain Resource Efficiency

Formed in 1997, Star Alliance now counts over 27 airlines as partners and serves over 640 million passengers each year. One of the biggest benefits of STAR ALLIANCE is codesharing. Using this arrangement, two or more airlines are able to sell the same flight using the same code. Codesharing reduces the costs associated with operating underbooked flights while it increases the visibility of an airline who is able to boast multiple routes worldwide despite not actually operating them. Increased scale allows partner airlines to gain efficiency and access to complementary assets.

ECOMMERCE ORDER FULFILLMENT PROBLEM

Fast shipping is the expectation, but fast shipping is expensive.

COOPETITION STRATEGY IN ACTION

Changing Dynamics of the Parcel Shipping Industry

• Explosion in parcel volume due to e-commerce
• Relationship between the players in the market is changing
• Coopetition is leading to a “win-win” situation

USPS Core Strengths

• “Last mile” connectivity
• Literally touches every doorstep, 153M delivery points
• Processing and handling capabilities that excel at smaller packages (< 5 lbs.)
• Low marginal delivery costs

UPS Core Strengths

• Highly automated distribution hubs that include larger vehicles, rail and airplane
• Superior routing logistics for large package transport
• Efficient airport-to-airport delivery
• Lower per unit upstream cost

Scope

• UPS picks up a package from the warehouse or distribution center and moves it through the UPS parcel network
• UPS delivers package to USPS for the “last mile” delivery to a residential address

Coopetition Results

• UPS and USPS share the revenue
• Increased market share and revenue
• Lower cost from optimized distribution efficiency
• Lower delivery charges for customers
• Improved customer service
• Sustainability and lower CO₂ emissions

COOPETITION RISKS AND BENEFITS

Whether you are familiar or not with the term, you’ve likely seen examples of coopetition in the news in some form or another. But of course, in these sort of deals, when two large competitors who first and foremost are looking to protect their own interests partner up, conflict happens. In fact, coopetition arrangements between larger competitors are often temporary…

COOPETITION REQUIREMENTS

• But the best, most successful, most sustainable coopetition arrangements – where you aren’t starting and restarting or terminating permanently – nearly always happen when then participants/stakeholders are looking to achieve something greater then themselves. Something greater than their own individual profits, or their combined benefits.
• A large external north star provides a guiding light for partners so that they don’t have to spend time, arguing over which priorities are most important. Or spend energy and resources focused on protecting themselves within the partnerships. A big bright, north star keeps them aligned on the same path for the long-term. 

MLS

“And sometimes, competitors come together to change the way an entire industry operates. Back in the 1800’s, U.S. real estate agents began to create multiple listing services.  Essentially, they paid into a listing service that allowed agents to see information regarding potential deals represented by competing agents.  And agents received additional commissions for helping one another out.  The approach allowed even the smallest firms to compete on the same footing as industry behemoths. 

• Sometimes, come together to change how entire industry operates
• 1800’s: US RE agents create multiple listing services: “Realtors would meet at the offices of their local association and share with one another information about the properties they were trying to sell.”
• Paid into a listing service that shared deal info of competing agents
• Shared commissions
• Fundamental principal: “Help me sell my inventory and I’ll help you sell yours.”
• Smallest firms can compete on same level as industry behemoths. 

Increase probability of long-term coopetition success:

• information is shared
• constant communication is present
• participants feel they can continuously learn
• information used to collectively adjust to external environment

In fact, MLS’s are still used today, even in the modern information age. Making the market liquid, helping agents earn their keep, and making easier for average citizen to buy into the American dream.

Governance

This case of Roman merchants during Antiquity also shed light on contractual forms of coopetition. Cooperation to get loan is an example of institutionalized coopetition through creation of an association by borrowers, driven by the lender (Caton). We find here an example of coopetition imposed by a third actor, as it could be possible in our contemporary period.

This actor plays a role of initiator and manager of coopetition. Structured management by the third actor appears as a tool and ensures good performance of implemented coopetition strategy.

Size of firms involved in coopetition is another interesting element of discussion. Coopetition in antic maritime trade appears in small business context. This contradicts the commonly shared idea by researchers that coopetition appeared first in big companies, in order to increase their power

• Another way to play this game. The Roman way. And coopetition works even better when things are set up so that many direct stakeholders benefit along the way.
• Often times, a collection of small businesses will use this way of coopetition to forward their collective interests in an entire region, market, or industry.

Constant data communication: Knowledge sharing/transfer/creation à competitive information asymmetry

Constant communication facilitates learning, opportunities, and trust

Data: A shared measurement system; Adapt to data

Backbone: Aware potential stakeholder synergies and power dynamics.

Proactive facilitator of stakeholder relationships and resources. Oversight of network performance, environmental risk.

Learning: Each partner believes it can learn from the other. Continuous and dynamic process that adjust to environment and helps participants evolve.

This brings up another point in putting together strategic coopetition arrangements.  An arrangement where information is shared, constant communication is present, and where participants feel they can continuously learn from the experience greatly increases the probable long-term success of a coopetition agreement.  Doubly so when information can be used to help the participants collectively adjust to any threats or changes in the external environment.”

Is Coopetition worth the trouble?

But is this really possible in today’s day and age? Why would two dominate forces look to spend resources to pursue benefits that are achieved beyond themselves?

The Big Reservation

• And, inevitably, at this point, a few will have a very specific reservation. It’s usually the small business owner.  The man or woman who has owned their business for 2, 5, maybe 20 years, and is worried about supporting their employees and surviving as they compete against companies many times their size.  They’ll say something like…
• Does coopetition really mean a few large companies orchestrate some way to grow the entire pie, and then have an even larger share of it? How can I be sure I benefit?
• Or in other words, do these big companies tout cooperation as something everybody benefits from, but really they operate in the same old way of doing business.

Yara Coopetition

We’ll take a broad look at how two very different companies—the Norway-based manufacturer Yara and the retail giant Walmart—have used collective-impact principles to improve their ecosystems for all concerned.

Yara is a global leader in fertilizer manufacturing based in Norway. It faced numerous obstacles in its effort to reach small African farmers from its port of entry in Tanzania. Yara’s Fertilizer had the potential to increase crop yields in the famine-afflicted country. But corruption in the government-controlled port delayed the unloading of shipments for many months. Roads were inadequate for transporting the fertilizer to farms and the produce back to the port; a third of the harvest was typically left to rot for lack of refrigerated transport. Farmers were poor, often illiterate, and unaccustomed to using fertilizer; they also lacked access to credit. A government ban on the export of key crops, meant to protect local consumption, had the unintended consequence of shrinking the market and curbing capital investment.

All this added up to a classic market failure that propagated famine and poverty and also curtailed Yara’s growth. The problem was deeply entrenched: The farmers had little power to influence government policy, and they were suspicious of any changes to their traditional methods. International aid temporarily alleviated hunger but left the underlying issues untouched. No single intervention could prevail; success required that all the interrelated obstacles be addressed at once.

Starting in October 2009, Yara worked to bring together 68 organizations, including multinational companies, civil society groups, international aid agencies, and the Tanzanian government, in a partnership known as the Southern Agricultural Growth Corridor of Tanzania (SAGCOT). The mission was to build a $3.4 billion fully developed agricultural corridor from the Indian Ocean to the country’s western border, covering an area the size of Italy. It involved investing in infrastructure, including the port, a fertilizer terminal, roads, rail, and electricity; fostering better-managed farmer cooperatives; bringing in agro dealers and financial services providers; and supporting agro-processing facilities and transport services. Public sources have provided one-third of SAGCOT’s funding; the rest comes from the participating private enterprises. Although originally envisioned as a 20-year project, the corridor was well established within 3 years and has already bolstered the incomes of hundreds of thousands of farmers. Yara was decisive in launching the effort but did not lead or control it. Nor was the company’s investment—$60 million—a major part of the funding. Yet the project has boosted Yara’s sales in the region by 50% and increased the company’s EBITDA by 42%.

Walmart Coopetition

Societal constraints are not limited to emerging markets, of course.

In 2012, as Walmart was working to reduce its packaging costs by eliminating 20 million tons of greenhouse gas emissions from its supply chain and, it encountered an unexpected roadblock: Its suppliers could not source enough recycled plastic to use in their packaging. It turned out that 45% of the U.S. population lived in cities that were still dumping trash in landfills. Even though recycling would have yielded significant new revenues and savings, cash-strapped municipalities could not afford the up-front investment required for collection and sorting equipment and for campaigns to change consumer behavior. So in April 2013 Walmart, like Yara, convened a cross-sector coalition of NGOs, city managers, recyclers, major consumer brand companies (including direct competitors such as Unilever and P&G), and financing experts from Goldman Sachs. Many of the participants had spent years trying to launch their own recycling programs; by the time they met, all recognized that the problem could be solved only by collectively addressing the challenge of financing municipal curbside recycling.

Together, 10 companies invested in the $100 million Closed Loop Fund, whose purpose is to promote investments in recycling infrastructure across the United States. It is governed by an independent committee of experts in finance, the environment, recycling, supply chain, and municipal management.

To date the fund has financed 10 projects. As the result of one project, every household in Memphis, Tennessee—a city that had no curbside recycling whatsoever—now has access to convenient recycling carts. These 10 projects alone are expected to reduce annual waste to landfill by more than 800,000 tons and cut greenhouse gas emissions by more than 250,000 tons while creating hundreds of jobs.

And the benefits to Walmart are considerable: The increased availability of recycled materials strengthens its supply chain and reduces the cost of packaging. Again like Yara, Walmart neither led nor controlled its cross-sector effort—but it provided the necessary impetus.

A SOLUTION FOR ALL
So at this point, you should have some sense of not only what strategic coopetition means, but when done right, what it can achieve for those who decide to participate.  It’s generally, at this point, when I can get people to understand the true power of coopetition, that people get excited.  They began to think about ways to leverage this approach for the benefit of their own businesses, or problems they know everyone in their industry or neighborhood are facing.

GREED IS GOOD
In the words of Gordon Gekko, “Greed, for lack of a better word, is good.” Greed is a clean drive that “captures the essence of the evolutionary spirit. Greed, in all of its forms; greed for life, for money, for love, knowledge has marked the upward surge of mankind.” If the first caveman didn’t greedily want cooked meat and a warm cave, he never would have bothered to figure out how to start a fire.

BUT, GOOD IS BETTER
The problem with greed however is that it’s a zero sum game; somebody wins, somebody loses. Money itself isn’t lost or made as Gekko said; it’s simply transferred.”

The goal of strategic coopetition on the other hand is to increase the size of the pie, such that all the players reap the benefits proportionately.

THE NEW WAY WORKS BEST 

The Power of Many: Coopetition Examples

There’s another way to play this game. The Roman way, if you like. Coopetition works even better when things are set up so that many direct stakeholders benefit along the way. Often times, a collection of small businesses will use this way of coopetition to forward their collective interests in an entire region, market, or industry.

Porto Alegre Beer: For example, in the Porto Alegre region of Brazil, local microbreweries very much did as the Romans.  They worked together to collectively purchase and distribute goods to lower costs and achieve scale in making and delivering their products.  They went one step forward, creating formal and informal associations that worked together to successfully position Porto Alegre beers as premium products.   [5 small firms producing specialty beers located in the Anchieta neighborhood in the city of Porto Alegre, Brazil work together to forward local microbrewery market. Initiatives include purchasing and distribiution. à This all seemed to happen fairly recently, in the 2000’s/2010’s. Led to revitalization of local neighborhood.]

California Dairy: In the United States, dairy farmers across California collectively invested in shared advertising campaigns to further penetrate their collective markets.

Pic Saint Loop Wine: French wineries in the Pic Saint Loup region did same in an even more organized fashion, running creating one organization that successfully position Pic Saint Loup wines as premium brands and grew their collective market in the process. [Informal community to exchange practices and resources. guided by a proactive economic effort: the positioning in a niche for “premium” wines. Decided to found a collective brand in order to follow their individual strategies. Thus, the winemakers of Pic Saint-Loup took part in a global movement to launch a collective brand. The collective brand supports a coopetition strategy based on quality improvement of the products. The relationships between the members, the rules of production and the union were formalized.

BIG CHALLENGES REQUIRE EVOLVED THINKING
In the past, companies rarely perceived themselves as agents of social change. Yet the connection between social progress and business success is increasingly clear. For example: The first large-scale program to diagnose and treat HIV/AIDS in South Africa was introduced by the global mining company Anglo American to protect its workforce and reduce absenteeism. The €76 billion Italian energy company Enel now generates 45% of its power from renewable and carbon-neutral energy sources, preventing 92 million tons of CO₂ emissions annually. And MasterCard has brought mobile-banking technology to more than 200 million people in developing countries who previously lacked access to financial services.

If business could stimulate social progress in every region of the globe, poverty, pollution, and disease would decline and corporate profits would rise. In recent years creating shared value—pursuing financial success in a way that also yields societal benefits—has become an imperative for corporations, for two reasons. The legitimacy of business has been sharply called into question, with companies seen as prospering at the expense of the broader community. At the same time, many of the world’s problems, from income inequality to climate change, from childhood obesity to human trafficking, are so far-reaching that solutions require us to combine our expertise and resources and evolve our way of thinking.

But even as corporations pursue shared value strategies, businesses inevitably face barriers at many turns. No company operates in isolation; each exists in an ecosystem where societal conditions may curtail its markets and restrict the productivity of its suppliers and distributors. Government policies present their own limitations, and cultural norms also influence demand.

These conditions are beyond the control of any company. To advance shared value efforts, businesses must foster and participate in multisector coalitions—and for that they need a new framework. Strategic coopetition is one such framework. Companies that embrace such new frameworks will not only advance social progress but also find economic opportunities that their competitors miss.

Learn more about how you can leverage the power of coopetition. Offer 1-day and 2-day shipping at ground rates or less. Drive
down your shipping costs, delight your customers, and scale as big as you want.

Offer 1-day and 2-day shipping at ground rates or less.

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Agile ecommerce order fulfillment alternatives to make the switch to FBM

Agile ecommerce order fulfillment alternatives to make the switch to FBM

Amazon Sellers are Awash with Disruptions

Last week the Amazon FBA (Fulfilled by Amazon) community was shaken by Amazon’s decision to restrict the kinds of inventory it’s receiving until April 5, 2020. Shipments of inventory turned away, and many FBA sellers left to fend for themselves amid the crisis. Many sellers who still have FBA inventory are panicking after seeing delivery dates pushed to April, and some items would even take a month to deliver. Many voiced concerns about losing an entire month of sales.

2021 Update: To learn about the latest FBA restrictions and to discover how to mitigate risk and maximize Amazon sales in Q4 and beyond, check our article and on-demand webinar on How To Improve Your IPI Score & Maximize Amazon Sales

Amazon SFP Sellers are Also Hitting Bumps

As merchants rush to convert their listings to Fulfilled by Merchant (FBM), some merchants on the Cahoot Order Fulfillment Network have reported that Amazon has started assigning weekend delivery dates to some Seller Fulfilled Prime (SFP) orders. It’s unclear at this time as to the reasons or which orders or merchants are impacted. One example is a medical supply Cahoot merchant in California. The merchant received several prime orders with a Saturday delivery deadline. Unfortunately, the only delivery option available through Amazon for the deadline was a $120 one-day air service for a $40 item. This is most likely a glitch in Amazon systems. Still, Sellers must fulfill these orders using expensive overnight shipping to maintain their good standing with Amazon or risk losing the SFP selling privileges.

Agile Ecommerce Order Fulfillment is the Present and the Future

COVID-19 situation has exposed a fundamental flaw of over-reliance on a single fulfillment channel. Just like an investor would diversify its portfolio between multiple asset classes, Amazon Sellers should not rely exclusively on FBA for their order fulfillment. There are order fulfillment options that are within your reach, and some of them can even be set up and running in a matter of days.

At Cahoot, we believe in agile order fulfillment that can quickly adapt to changes. Agile fulfillment requires three parts: (1) Flexibility, (2) Resilience, and (3) Scalability. Flexibility implies fulfillment that follows the money, so you can quickly adapt and make changes—for example, quickly adding order fulfillment capabilities in regions where demand is concentrated. If you get a surge of orders from California, having a fulfillment option regional or local to in California would help you lower shipping costs while speeding up deliveries. Flexibility also means the ability to shift fulfillment locations when demand patterns change naturally or as a result of new sales channels or marketing campaigns.

Resilience in ecommerce order fulfillment means making sure your pick, pack, and ship operations continue during disruptions. Major events like the Amazon FBA restriction won’t bring your business down if you have redundant fulfillment capabilities.

Scalability means ensuring your order fulfillment capacity can scale to support your business’ growth and downturn. Having multiple fulfillment options and the technologies that tie them all together can minimize disruptions as your business grow. The aim here is to right-size your operations to suit your business demands while optimizing costs

4 Order Fulfillment Alternatives for Amazon Sellers

Below are 4 popular agile order fulfillment options for sellers to consider.

Own Warehouse

Setting up order fulfillment operations within your own warehouse could be a reasonable stop-gap measure if you have the systems, supplies, and staff. This is a good redundancy strategy to continue selling if FBA goods ever go out of stock.

However, continuing to do order fulfillment using a single fulfillment center is unsustainable when compared to the cost and speed of FBA. Fulfilling 1-day or 2-day delivery prime orders from a single location is very costly. A guaranteed next-day express shipping service is four times the cost of an economical ground shipping.

Pros:

• Suitable for a temporary back-up option for FBA
• At full capacity utilization, order fulfillment can be very economical
• Complete control over your operations and full flexibility in how you package your items

Cons:

• Requires considerable time and resources to find, train and manage staff and day-to-day operations
• Limited coverage via Ground service to deliver orders within 1-Day and 2-Day
• Reaching and maintaining full capacity utilization year-round is very hard
• May not be suitable for Amazon orders if the Operations are brand new which can lead to unacceptance fulfillment defect rates

3PL (Third Party Logistics)

3PLs can provide flexibility by allowing you to add order fulfillment locations faster than building your own warehouses. Smaller 3PLs may be willing to offer lower prices to compensate for their limited coverage.

Smaller 3PLs are a good choice if you already have your own order fulfillment operations and are only looking for a new location to have better two-day ground coverage. Smaller 3PLs are often mom-and-pop operations with limited technology and capacity. Hence, limited in scalability. If you’re looking to offer free one- or two-day shipping across the U.S., working strictly with small 3PLs can be complicated. It may require working with multiple companies, integrating all of their systems to yours, and maintaining them regularly. Plus, you will not have the flexibility to re-calibrate your fulfillment in response to changing customer demand patterns. And, you will be impacted if your single 3PL site has to shut down or downsize their operations for whatever reason.

Pros:

• Add new locations to complement your own order fulfillment
• Access to discounted freight and parcel shipping rates negotiated by the 3PL
• Supports multichannel order fulfillment

Cons:

• Limited capacity and flexibility. They often require long-term contracts with a minimum volume commitment for favorable pricing.
• Limited technology to provide real-time visibility and intelligence into the orders and fulfillment
• Difficult to reliably achieve economical 1 or 2-day delivery nationwide.
• Support for Seller-Fulfilled Prime orders may be limited due to demanding SLAs and special requirements

On-Demand Warehousing

On-demand warehousing or 4PLs (Fourth Party Logistic Model) are services that manage multiple 3PLs so merchants can quickly add warehouses as needed. They help merchants find new warehouses that fit their location, timing, or special handling needs (e.g., hazmat, temperature-controlled, perishables, to name a few). Companies such as Flexe, Flowspace, and Ware2Go are platforms that connect 3PLs who have excess storage space with sellers who need them. 4PLs make it simpler for merchants to work with multiple 3PLs because merchants only need to integrate with the 4PL and have the flexibility of short-term space rentals (instead of the long-term commitment typically required by 3PLs).

4PLs generally provide customer support and additional services such as receiving inbound shipments, storage, pick-and-pack, and outbound shipping. But through multiple facilities in distributed geography instead of just one.

Like 3PLs above, merchants need to make sure the 3PLs they are working with are capable of offering 1-day or 2-day delivery nationwide. Not all 4PLs are geared toward fast and cost-effective B2C e-commerce order fulfillment as some tend to specialize in services such as bulk store replenishments, short-term storage facilities, or FBA inventory prep. Because 4PLs are primarily selling 3PL storage and fulfillment services, sellers have to figure out how to optimize their overall costs and business operations by themselves.

Pros:

• Only pay for warehouse space you need without the long-term commitment.
• Minimize complexity from integrating with multiple 3PLs to just one 4PL
• Storage fees may be cheaper than conventional 3PL models because warehouses on the platform mostly list their unused space.
• Supports multichannel orders

Cons:

• Does not specialize in Amazon eCommerce order fulfillment.
• Support for nationwide Amazon Seller-Fulfilled Prime (SFP) fulfillment could be unpredictable, where the performance metrics are very demanding and there is little to no room for errors.
• Space availability varies frequently and dependent on the 3PL partners who are simultaneously servicing their own clients and other platforms.
• Potentially more expensive than a traditional 3PL for eCommerce order fulfillment because both the warehouse and the platform need to make money.

Peer-to-Peer Order Fulfillment^TM

Services like Cahoot offer Peer-to-Peer eCommerce Order fulfillment^TM, which is a hybrid between in-house fulfillment and 3PLs. It combines the flexibility and reach of a 4PL with the cost efficiency of in-house fulfillment. In the peer-to-peer model, ecommerce sellers exchange warehouse space and fulfillment services.  Under this model, merchants who currently do their own order fulfillment can now work together in a coalition and offer free and fast shipping to each others’ customers wherever they may be located.

Peer–to–peer model offers the most agile order fulfillment because it connects ecommerce sellers to a network of trusted peers, thereby creating a very large network.

First, it provides unparalleled flexibility because online retailers can quickly and easily re-calibrate their fulfillment strategy and locations in response to their inventory demand graph as opposed to serving all customer orders from a fixed fulfillment configuration. This enables Amazon sellers to win the buy box more often and without undue compromise to their margins.

Second, it provides resilience because online sellers collaborate with multiple geographically distributed fulfillment nodes simultaneously on a large-scale global network. So if one partner falters, the merchant can still continue their operations without any business disruption.

Third, peer-to-peer order fulfillment provides high scalability due to the sheer number of high-performing members on the network who each has varying scales of warehouse capacity and resources.

Peer-to-peer’s workshare model allows for the lowest overall storage and order fulfillment costs compared to other options.It takes mere days to start having your stuff fulfilled through Cahoot, and you can get shipping in no time. To learn more or get started, contact us today.

Pros:

• Peer-to-peer gives brands and retailers access to the widest range of ecommerce order fulfillment locations, both domestic and international.
• Overall storage and fulfillment fees are the lowest because of its unique “workshare” model.
• Works with other merchants of repute who have a proven record of handling fast same-day SFP orders and defect-free operations.
• Scales easily and cost-effectively to support the most demanding SLAs

Cons:

• Not always a solution for newer merchants as acceptance into the network requires a proven track record of high-performance fulfillment that can be verified
• Does not offer custom branding or packaging inserts currently.
• Merchants may need to arrange for inbound freight to the receiving warehouses.
• Not suitable for drop-ship merchants or ones who carry just-in-time inventory.

Offer 1-day and 2-day shipping at ground rates or less.

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BRIDGEPORT, CT (April 14, 2021) – Cahoot, the world’s first peer-to-peer eCommerce fulfillment network, announced that it has been named on the Fast Company’s Prestigious List of the World’s Most Innovative Companies for 2021. Cahoot enables brands and online retailers to affordably provide one-day and two-day delivery nationwide by storing and fulfilling goods for each other.  

Fast Company’s Most Innovative Companies (MIC) list honors the businesses that have not only found a way to be resilient in the past year but also turned those challenges into impact-making processes. These companies did more than just survive; they thrived—making an impact on their industries and culture as a whole. This year’s list features 463 businesses from 29 countries.

“We are honored to be named one of the World’s Most Innovative Companies and recognized for our work. We are enabling businesses of any size to affordably offer their customers the same superfast delivery experience as Amazon” said Manish Chowdhary, Founder and CEO of Cahoot.

Like the Airbnb marketplace of homeowners and travelers, the patented Cahoot fulfillment network brings together the collective power of many SMBs and their warehouses to fulfill orders, thus reducing fulfillment costs and expediting delivery. Cahoot’s optimization algorithm further analyzes all combinations of warehouses, carriers, and shipping services to find the most affordable and efficient way to deliver orders fast.

With consumers flocking to online shopping in 2020 due to COVID, eCommerce grew an unprecedented 44% year-over-year, nearly three times the historical annual growth. At the height of the pandemic, even Amazon’s fulfillment services faltered. Customer orders took almost a month to arrive as warehouses struggled to fulfill orders. Amazon stopped accepting non-essential goods in its warehouses and prioritized its direct sales over those of its marketplace sellers, leaving hundreds of thousands of sellers that rely on its popular fulfillment service (FBA) scrambling for alternatives. Such incidents have caused merchants to always be prepared with a backup provider when they need it.

This eCommerce explosion has led to a shortage in warehouse space, well-priced and available labor, and carrier capacity. Warehouse vacancies reached an all-time low in Q3 2020 while rents were at an all-time high. LinkedIn also reported a surge of 73% job openings for fulfillment workers, the highest among all categories, and wages began creeping up. Moreover, all major carriers, including USPS, increased rates and added surcharges to handle the unprecedented increase in demand. All of this has resulted in much higher operational costs for retailers. And, at a time when most consumers are struggling financially, raising prices is not an option for merchants.

“Traditional solutions do not meet the needs of SMBs – unlike large corporations that have the power to negotiate aggressively with landlords and carriers to stay competitive. With Amazon pushing its popular prime membership program to transition from 2-day free delivery to now 1-day, even the largest retailers are facing logistical challenges. But Cahoot changes all that by intelligently aggregating the power of many,” said Chowdhary.

By unlocking previously unavailable warehouse capacity from tens of thousands of merchants across the U.S., Cahoot is transforming eCommerce fulfillment into a new collaborative model that’s more efficient. Cahoot’s fulfillment model is also environmentally friendly besides scaling up to meet the rising consumer expectations of free and fast delivery. And for the first time, online merchants can monetize their existing warehouse space and labor in a way previously not imagined or possible. “Before Cahoot, we didn’t really know how to leverage our extra space and fulfillment capacity. Becoming a Cahoot Fulfillment Partner has been a great way to make extra money without the hassle of becoming a full 3PL. Onboarding was fast and easy; Cahoot software is so efficient that we pick Cahoot orders before our own!” said Robert Hill, CEO of Seismic Audio Speakers.

With Cahoot, merchants can expand to regions previously too far for fast ground shipping and too expensive for expedited air shipping. “My customers now expect free 1-day and 2-day delivery, which is very expensive and difficult to provide. But with Cahoot, I can now offer 1-day delivery in both the East and the West with ground shipping, in addition to my home state of Kentucky,” said Darren Somerville of Impact Battery.  

By providing fulfillment as a utility-like service as opposed to a competitive advantage previously available only to the largest and highly capitalized corporations, Cahoot aims to fuel even greater innovation – sure to benefit consumers around the world.

“Before Cahoot, we were selling only on Amazon. The inventory restrictions imposed by Amazon FBA were difficult for my business,” said Eli Miller, owner of Twinkle Toy. “Cahoot helped us grow by serving customers nationwide across multiple selling channels, including our own website. It’s a whole new opportunity that I would never have had without Cahoot.”

Cahoot’s shipping volume increased five-fold year-over-year in 2020. Many merchants have found success through Cahoot: 

• A chocolatier in Brooklyn, NY, added 34% more sales just by outsourcing fulfillment to 2 additional locations.
• A prominent battery merchant in the Midwest maintained their Amazon Seller Fulfilled Prime eligibility by expanding 1-day ground coverage to 45%+ of U.S. consumers.
• Another merchant selling big, bulky products saved 88% on two-day delivery costs and tripled sales in just three weeks.

Fast Company’s editors and writers sought out the most groundbreaking businesses across the globe and industries. The World’s Most Innovative Companies is Fast Company’s signature franchise and one of its most highly anticipated editorial efforts of the year. It provides both a snapshot and a road map for the future of innovation across the most dynamic sectors of the economy.  

Cahoot is available for merchants looking to expand their reach for one- and two-day delivery services across all popular selling channels, including Amazon, Walmart, eBay, Shopify, BigCommerce, and more. Merchants can reach a Cahoot fulfillment expert at www.Cahoot.ai

ABOUT CAHOOT
Cahoot is the world’s first peer-to-peer eCommerce fulfillment network that helps online businesses offer nationwide 1-day and 2-day deliveries. Cahoot offers drastically lower fulfillment fees because it enables merchants to store and ship the merchandise for each other. This novel business model also enables merchants to make extra money using their existing warehouse space and personnel.

ABOUT FAST COMPANY
Fast Company is the only media brand fully dedicated to the vital intersection of business, innovation, and design, engaging the most influential leaders, companies, and thinkers on the future of business. Fast Company’s Most Innovative Companies issue (March/April 2021) is now available online here, on iTunes, and on newsstands beginning March 16, 2021

Offer 1-day and 2-day shipping at ground rates or less.

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Podcast: Ecommerce Wizards Podcast – What is Amazon’s Buy With Prime Button?

Guillaume Le Tual, host of the E-Commerce Wizards Podcast, interviews Manish Chowdhary, CEO of Cahoot, about Amazon Buy With Prime. The service allows merchants to install the Amazon Prime button on their product page, shopping cart, and checkout. Customers can then log in to their Amazon Prime account to check out and receive one or two-day free shipping, free returns, and no minimums. For customers, it’s a great service, but for ecommerce merchants, it’s a Trojan Horse. Amazon Prime circumvents the entire order checkout process from the merchant’s platform, and payment processing goes through Amazon, which also collects data about the customer and charges the seller for order fulfillment. While Amazon FBA can be a benefit for merchants who lack a strong shipping distribution system, there’s also a cost of 15% that some merchants say is too high to make a profit. Amazon Prime service is a big deal for merchants because it can replace their whole checkout experience and be a disadvantage for them.

Guillaume:

Hello, everyone. Guillaume Le Tual here, host of the E-Commerce Wizards Podcast, where I feature leaders in e-commerce and business.

Today, for a second time, our guest is Manish Chowdhary, who’s the CEO of Cahoot. And we’re going to have a chat together about what is Amazon Buy With Prime.

Speaker 3:

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Guillaume:

So Manish, thanks for being here for a second recording.

Manish:

Thank you for having me, Guillaume. Thank you very much.

Guillaume:

All right, can you enlighten us? What is, first of all, Amazon Buy With Prime?

Manish:

Amazon Buy With Prime is the Amazon’s mission to dominate the world, as it always does. But let’s break it down.

What Amazon Buy With Prime is, it’s essentially an option for websites outside of Amazon to install the familiar Amazon Prime button on the product page, in their shopping cart and checkout. So the user, instead of checking out through your native platform’s shopping cart and checkout, you can check out by logging into your Amazon Prime account, as you would on your Amazon.com website.

And as a result of that, you will get all the benefits of Amazon Prime, which is one or two-day free shipping, free returns, and also there’s no minimum and so on. So you log in, and you check out using Amazon, and then Amazon will ship the item to you from its FBA, Fulfillment by Amazon Warehouse, and you’ll get it in one or two days.

So great service for the consumer, but of course, not so great for the sellers, which I can talk about further.

Guillaume:

Yes, exactly. From an entrepreneurship and business point of view, it’s like, oh, big red flags here showing up. So, okay, what do you see as a red flag for merchants here?

Manish:

Right. So for the merchants, for the sellers, I call Amazon Buy With Prime a Trojan Horse. It’s essentially, what Amazon did with its AWS, the web services or the hosting division, they started using the web hosting for themselves. And then they converted that into a mass service that we all, many of us use, Amazon’s Web Hosting Services.

So this is Amazon’s attempt to basically get into the 3PL, the order fulfillment world. They built the Amazon FBA for themselves, for products that are sold on Amazon, and now they’re opening this up to the larger internet. So if you are selling on your own website, how can Amazon participate and get a share of that wallet from your website, because they have 150 million subscribers? But essentially, what Buy With Prime is doing is essentially encapsulating three different Amazon services into one, which is Amazon Advertising, Amazon FBA, Fulfillment by Amazon, and Amazon Payment.

So essentially, when the user checks out using the Buy With Prime, it completely circumvents the entire checkout process from the platform, and it basically puts payment processing with Amazon. And then, of course, Amazon collects all the rich data about the customer. What are you buying? When are you buying? And also, Amazon gets to charge the sellers for order fulfillment.

And so, this is a very, very attractive service for the consumer. But of course, for the seller, it creates a lot of challenges. And I can continue to elaborate, but basically, it’s a Trojan Horse and there are lots of disadvantages for the sellers, and there are some advantages as well, to be fair.

Guillaume:

Yeah. I like your term, Trojan Horse, and it is a powerful move from Amazon. You can see, for example, Shopify CEO, that will slip up about this at first and say, “Yeah, yeah, we’ll do it.” And then they will backtrack on this, and say, “No way,” because it would replace Shop Pay, which is one of the competitive advantage of Shopify.

So, it is a big deal for a merchant to have your whole checkout experience totally replaced by Amazon. So yes, on the positive side, if you don’t have a strong distribution system already in place, having Amazon FBA, Fulfilled by Amazon, can be a strong benefit. But also, there’s a cost to this, and the cost is not always the best.

I know some merchants that say, “If I sell myself and I fulfill myself, I make money. If I use FBA, well, it’s not worth the trouble anymore. I don’t make much money anymore.” You know? So there’s that aspect, about the extra 15%, it can make a difference. For the merchant, cost will not be zero to fulfill themself, obviously. But that 15% sometimes is too much for merchant, that it doesn’t make it worth it for them to run the business if all the sales will come into that channel, with FBA.

Also, you give up a lot of your control. That order is going to go into Amazon. How much control do you retain personally as a merchant over this transaction? How much information do you have about the customer? How much customer service do you need to do? And so on. Perhaps you can elaborate a little bit on that aspect.

Manish:

Absolutely. All good points, Guillaume. But even beyond that, Buy With Prime infiltrates the entire customer journey from discovery, conversion, post purchase, which includes fulfillment as you said, and the repeat purchase. And I’ll give you some example for each one.

Discovery is essentially, Amazon, you would install a familiar Buy With Prime, the blue Amazon Prime, with the swoosh, the very familiar icon that we know. So now, that will get installed, say, right below your Add to Cart button, if you’re on a Magento site, for example. And so, just imagine the button itself on your site is a reminder for the customer to go check out Amazon, because you’re putting Amazon branding on your product details page and so on. So the Amazon, even if you acquired this traffic and brought it to your website, now the customer is being potentially invited to go, reminded of their Prime membership, so that they can possibly go on Amazon and compare prices and so on. So that could lead to siphoning of traffic. That’s one.

On the conversion side, most ecommerce brands, most websites, retailers, like to encourage larger shopping carts. We know that on your DTC website, most brands have free shipping on orders over, say, $49. So, it’s not free-free for buying a toothpick or buying a toothbrush, but that’s what you get with Amazon Prime.

Amazon Prime does not have those limits. So if you’re a Prime member, the people could actually, this could lead to lower cart size on your DTC site, as opposed to encouraging a larger cart. That’s the conversion part.

And then, let’s say you add the item to the shopping cart and you abandon the cart. We know that 85% of the Amazon Prime members visit Amazon.com at least once a week, and 45% of them make a purchase, a transaction, once a week. That’s a very high repeat loyalty that these Amazon Prime subscribers have to Amazon. And part of it is because they’ve paid $139, $140 annual membership, so they want to exploit that.

But imagine somebody added the item to the shopping cart and they didn’t check out. Now, it’ll be very difficult for the brand to re-market to this customer. And if they hop over to Amazon once a week, they might be targeted with the ads of another product that competes with this product. And you are the one who helped add that item to the cart in the first place.

So, those are some of the challenges on the order fulfillment side to continue with that school of thought. The product is going to come in an Amazon branded box. We’ve all seen the familiar Prime tape that goes on the brown box, with Amazon advertising. So, you bought the item from this DTC brand that’s looking to promote its ecommerce brand, its value proposition to the customer. But the customer is being reminded of Amazon every step of the way. And so, that is not very good.

And then finally, on the repeat purchase, the customers are more likely to go back to Amazon. And if you are selling on Amazon, you’ll have to not pay anywhere between that eight to 20% commission. So there are many aspects of it is not so enticing for the seller. And of course, there are some advantages which I can cover as well, Guillaume, to be fair.

Guillaume:

We’ll cover after. I think we’re not done with the downsides, quite frankly, which to me is way larger than the upside. Because if you want to use Amazon’s email, FBA or whatever, fulfillment services and so on, well, you can just list your product on the marketplace.

Also, Amazon’s fees, the normal fees plus the fees for fulfillment, they are fair when Amazon is bringing you the customer. And it’s the reason why you want to put your products on the marketplace in the first place, because Amazon is going to bring you traffic, going to bring new customers there.

But if you paid for the customers yourself separately, maybe with your own Google Ads, your own marketing efforts and so on, and then you’re still going to pay all those costs and send over the customer to Amazon, and then you sort of lose traction. And I really like your other point. What if the customer does not buy right away? It happens. You add stuff to cart, you don’t finish, get interrupted, kids calling you, whatever. You come back, and then you’re going to see ads and similar product, maybe cheaper on Amazon. It is really a Trojan Horse. From my point of view, it is a really big mistake from business point of view.

I am all for selling on marketplaces like Amazon. Do it. Go for it if it makes sense for your business. It’s a good idea. But your own website, your own .com or whatever, is a separate thing, is a way to diversify. So, you do not want to tie it even more to Amazon. And Amazon is just trying to take buys more and more into what it currently does not control.

It would prefer that all transaction worldwide goes on Amazon, and they don’t currently control all those independent websites. Now, that’s one way to sort of control them, to a great extent. So, I see more negative than positive. But let’s go with the positive. Let’s be fair. So, what’s the positive?

Manish:

Well, positive is, if you have a website, an ecommerce brand that’s not very well-known, and you don’t have a lot of customer trust, Amazon Prime button can install that trust. It’s sort of like many websites that I don’t want to check out and provide my credit card information to that website, because maybe I don’t have trust.

And that is how PayPal gained prominence in the first place. People love checking out through PayPal. And consumers, of course, we all want that free one-day, two-day delivery. So, if the brand does not have the ability, if the seller’s not utilizing services like Cahoot, it would be very difficult for them to offer that level of service.

So, this would be a great way for them to get traction, if they don’t want to take any hassle with fulfillment, operations and logistics, and even customer care. Because remember, as part of the Prime purchase, you’re also delegating a lot of your customer service to Amazon. So, whether it’s a good thing or a bad thing. But that’s certainly like, I’ll give you an example, and we actually did the study.

So the Skullcandy, you’re probably familiar, it’s a very popular headphones brand, very popular with gamers. And they’re selling a product that, let’s say they’re offering four to seven-day delivery, which is what we found when we checked their website, when we did the study about a few months ago, in the summer.

And then another company called Razer, which is an up and coming brand, and if they installed Buy With Prime, and both the products are priced equally, as a consumer you might be motivated to check out through Buy With Prime on Razer.

So in the absence of date certain shipping, let’s say I have a birthday party, I need to buy a gift and I need to have it arrive by Saturday. Today is Thursday. So, my options are very limited. So it can be quite advantageous in those cases for the people who don’t want to fully outsource fulfillment to FBA.

And just to add to that, by the way, the cost of fulfilling orders with Amazon through Buy With Prime is not the same as if the order arrived on Amazon.com. Because Amazon makes the 15, whatever, 15% commission on those, they will not make that commission on these orders. And therefore, these orders will be classified as multichannel order fulfillment.

And we know that if you try to get a Magento order Fulfilled By Amazon (FBA), you pay more. So it’s not the same low price that if the order originated on Amazon. And we’ve done some calculation, in many cases, it works out to be 51% more expensive to do multichannel fulfillment. And of course, if you want the map, there’s tons of webinars on our Cahoot.ai, on the Resources section. Check out or contact us, we’ll be happy to elaborate on that multichannel fulfillment.

Guillaume:

And just to clarify it, so you’re saying that 51%, just to be sure I understood it well. So 51% more expensive from multichannel fulfillment if you send the order then to Amazon, so if it came from your on e-commerce store, is that what you’re saying?

Manish:

That’s right. Because, let’s say, you’re selling socks. I have black socks and I have red socks. And Amazon FBA, routine FBA will cost you $4 and 22 cents. But if I send Amazon that order from Magento to fulfill, it’ll cost me $6 and 31 cents to ship the same identical item. The only difference is this is a Magento order versus an Amazon.com order.

Now further, let’s say a customer buys a pair of black socks and a pair of red socks. Amazon treats them as two unique items. They don’t put them all together. What’s the composite weight? The weight of the items, the two pairs of socks, is not going to be different. You’ll pay double because you’re paying 4.22 for one pair, you’ll pay $8 and 44 cents for two pairs of socks. And if it was a multichannel, if it was a Magento order, it’ll be $12 and 74 cents. That’s how we arrived at the 51% more expensive amount.

Guillaume:

Okay. So, it is not optimized in the merchant’s favor for cost saving and bundling boxes and so on, because actually Amazon will typically ship to you in all separate boxes as fast as it can. But somebody’s paying for all this, this, quote, unquote, free shipping. The merchant’s paying for it.

Manish:

Well, that is just the way Amazon’s pricing model. So the product may still arrive in the same box, but the way how FBA prices its services, it does not. It simply looks at a price, flat price per item. Per item. Now it does not take the weight into consideration.

So FBA, especially multichannel fulfillment through FBA, becomes quite pricey when you have larger number of units per order. So, if you’re a apparel ecommerce brand, if they try to do multichannel order fulfillment, let’s say you have a Magento store or a Shopify store, and you want to get those orders fulfilled through FBA, the cost will add up and it becomes quite expensive. Because apparel, and certain product categories, lend themselves for larger number of units, average number of units per order.

Guillaume:

Okay. All right. Okay, thanks for that clarification. Is there anything else that people should know about the Amazon Buy With Prime?

Manish:

I think you covered it. Shopify has banned it. Shopify, they’ve openly come out and say that this is against the Terms of Service, and you’ll get a big warning if you’re a Shopify merchant.

It’s still a By-invitation Only program. We know a little about it so far. So, I think merchants should… Essentially, this is a call to action for brands and retailers, that faster shipping, the two-day shipping, it used to be an Amazon thing. Now it’s going to be an internet thing. It is what’s expected from you.

So I would encourage brands and retailers to look at their order fulfillment strategy, their operation strategy. You don’t need to go build tens of warehouses. That’s very expensive. In fact, right now, the warehouse rents are at all-time high, Guillaume, all-time high. And the vacancy is an all-time low. So even if you wanted to go and look for warehouses in California, or the West Coast of the US, you can’t find them.

If you find them, you’re going to have to sign a multi-year lease. You’re going to have to make a very large capital investment. It’s like the days of, you know, we no longer see competitive advantage in owning servers in the age of cloud computing.

So order fulfillment is going through a similar transition, that services like Cahoot are democratizing that service. And in fact, if you have excess capacity in your warehouse, we encourage you to come apply at Cahoot.ai, to join as a fulfillment partner.

So this is my recommendation for brands and retailers, to not take delivery and shipping lightly. In fact, we have a saying internally in our circles, that half your shopping experience is now your shipping experience. So, you got to really think of it from a customer experience standpoint.

Guillaume:

Yes. Okay. And I think this is pretty good coverage for Amazon Buy With Prime. It can be seductive for some consumers to check out at equal price point and so on. I’m going to benefit from that checkout experience. But you can compete with it, no matter the size of the merchant. It’s more a question of, can you deliver quickly? Can you write the date of arrival on your own website?

And of course, inviting Amazon on your own .com is, generally speaking, a very bad idea as a business move. It should be a diversification, unless it’s sort of a mini site that you more or less don’t care about. That is just a marketing site that is there to drive traffic, a bit like some brands have a lot of mini sites, and blogs, and so on that just drive traffic to a store. Then, if that’s the role of your small e-commerce store, that would be perfectly fine.

But if it’s your real, branded e-commerce store that you care to build a brand and brand value, I would not invite Amazon, as much as possible, on that site. I think it’s a bad business move.

So, that’s it. Well, Manish, thank you for this discussion. If people want to get in touch with you, what’s the best way?

Manish:

Well, hop over to www.cahoot.ai. That’s singular. And fill out the Contact Us form. I would love to chat with you.

And you can also find me on LinkedIn. Just Google, well LinkedIn, my name. Search my name on LinkedIn, with Cahoot, and I will personally respond to you.

So I’d love to chat with merchants, brands, retailers. Because there’s much to learn from practitioners, as much as we know about logistics, and share stories and try to find a better way to do business, that puts more money in the pockets of the business owners.

Guillaume:

All right. Well, Manish, thank you for being here today.

Manish:

Thank you for having me.

Offer 1-day and 2-day shipping at ground rates or less.

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