Amazon doubles deliveries in 2016 for third-party sellers

[January 04, 2017]  By Jeffrey Dastin

(Reuters) - Amazon.com Inc <AMZN.O> shipped 50 percent more items this holiday season than last for third-party vendors and doubled the amount for 2016 overall, the retail giant said on Wednesday.

The news offers new data points for investors who are hoping Amazon will post a profit for the fourth quarter when it announces results in the coming weeks. Seattle-based Amazon, known for its roller coaster results in years past, has forecast that operating income would range from nothing to $1.25 billion.

Amazon, the world's largest online retailer, has said the 2016 holiday was its best-ever shopping season. However, high spending on warehouses and video production are expected to drag on profits.

More sellers are paying the company to store, pack and ship their goods through the Fulfillment by Amazon service. Amazon more than doubled the items it delivered for other sellers in 2016 from the year prior to exceed two billion, a spokesman said.

Active sellers using the fulfillment service rose more than 70 percent in the year, Amazon said on Wednesday. It did not specify the total number of vendors.

Third-party sales were "record-breaking" in 2016, Peter Faricy, vice president for Amazon Marketplace, said in the statement. Amazon takes a cut of the proceeds.

Amazon will likely top its profit-margin guidance for the fourth quarter, Morningstar analyst R.J. Hottovy said in a research note last week. Price competition seemed subdued in December and Amazon avoided delivery bottlenecks it experienced in 2015, he said.

Cyber Monday, a shopping spree four days after Thanksgiving, is another indicator. Shoppers ordered more than 28 million items from third-party sellers this year, versus more than 23 million items on Cyber Monday in 2015, Amazon said.

Amazon boxes are seen stacked for delivery in the Manhattan borough of New York City, January 29, 2016. REUTERS/Mike Segar/File Photo

Amazon is building its own fleet of planes to handle the rise in orders and supplement shipping that it contracts out to companies like FedEx Corp <FDX.N> and United Parcel Service Inc <UPS.N>. Data reviewed by Reuters and interviews with airport officials show that Amazon has loaded these aircraft with big but lightweight boxes, helping it dodge fees from cargo carriers increasingly pricing based on volume rather than weight.

The company does not disclose the revenue it generates from its Fulfillment by Amazon service. Chief Executive Jeff Bezos has said that close to 50 percent of the units purchased on Amazon come from third-party vendors.

Clicks on product advertisements paid for by third-party sellers grew 150 percent, Amazon said.

(Reporting by Jeffrey Dastin in New York; Editing by Leslie Adler)

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