Amazon.com Inc. is turning to merchants who sell on its marketplace for extra warehouse space, a less-costly way to expand inventory available for quick delivery.
Inventory available for delivery within two business days expanded by 6 million items under the Seller Fulfilled Prime program, the company announced Thursday. Amazon earlier this year introduced the program, which lets independent merchants sell goods on Amazon as “Prime Eligible” even if Amazon isn’t handling packaging and delivery.
It’s the latest sign the world’s biggest online retailer can’t build facilities quickly enough to meet demand for an ever-expanding assortment of goods that customers want delivered fast and free. Warehouse capacity issues and the cost of new facilities helped increase Amazon’s spending on order fulfillment 34 percent in the third quarter. The big expenses caused the Seattle-based company to miss analysts’ profit projections, driving down shares 8.8 percent since the results were reported Oct. 27.
Amazon’s revenue is projected to increase 28 percent to $137 billion this year, according to analysts’ estimates compiled by Bloomberg. The growth prompted the company to accelerate its warehouse building spree, with more than 15 fulfillment centers opening in California, Texas, Illinois, Kansas, New Jersey, Georgia and Florida that will collectively employ more than 12,000 workers.
In addition to adding capacity, Amazon introduced Seller Fulfilled Prime to take advantage of the warehouse space of its merchant partners. Amazon sells its own inventory as well as products owned by merchants who give the company a cut of each sale.
