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Amazon Opens Logistics-as-a-Service Offering To Leverage Bloated Warehouse Footprint

Amazon is opening up Buy with Prime program to increase merchant delivery and processing fees.

Amazon has launched a gambit to leverage its vast warehouse empire by selling and delivering products for independent retailers.

The online retail giant announced Wednesday that it plans to open its Buy with Prime program to all eligible U.S.-based merchants Jan. 31, after launching in April as an invitation-only program.

The program allows merchants to pay Amazon a fee to store and deliver products, handle returns and process payments. Amazon said that the Buy with Prime program has been shown to increase shopper conversions to specific brands by 25% more than retailers who aren’t in the program.

Experts say that the move essentially pivots Amazon to become a logistics-as-a-service provider, a similar strategy it has taken with its cloud storage and computing business, Amazon Web Services, Axios reported.

Opening up its warehouse network to companies that aren't selling products on comes as the tech giant grapples with its industrial building and acquisition binge in 2020 and 2021, when it added more than 260M SF of warehouse space to its portfolio.

Over the past year, Amazon has been backing out of new leases, closing distribution facilities and subleasing existing warehouse space in an attempt to rightsize its footprint amid economic uncertainty and declining product sales growth, a process that could take years to accomplish. Amazon Chief Financial Officers Brian Olsavsky admitted in April that the company had "excess capacity in our fulfillment and transportation network" and was overstaffed.

Amazon announced last week that it plans to lay off 18,000 staffers early this year.