Amazon is 'pausing' its own shipping service that it was beta-testing in the US — read the memo it just sent sellers (AMZN)

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  • Amazon told sellers on Tuesday that it will pause in June its in-house shipping service that was being beta tested in a few US cities.
  • It didn't provide a clear explanation for the suspension, but some experts and sellers believe it's due to the lack of profitability in its service.
  • Amazon launched its own shipping service in 2018 and first started testing in the Los Angeles area.
  • Visit Business Insider's homepage for more stories.

Amazon is suspending its own in-house shipping service that was being beta-tested in several US cities.

In a note to sellers on Tuesday, Amazon said that the service, called Amazon Shipping, will be paused starting on June 5. It didn't provide a clear explanation for why the suspension is happening.

Amazon is likely giving a two-month period to help sellers find a replacement.

"At Amazon, we regularly evaluate the requirements of our businesses to ensure we are structured in the best way possible to meet the evolving needs of our customers," the note to sellers said. "After careful consideration, we have decided to pause our Amazon Shipping service in the US. Our last day for pick-ups will be June 5th."

Amazon's representative confirmed the move in an email to Business Insider.

The change is likely a business decision driven by the lack of profitability in Amazon's own shipping service, according to Ed Rosenberg, who runs an online seller group called ASGTG. Given Amazon needs all the shipping support available, amid the supply chain lockdowns caused by the coronavirus outbreak, it otherwise makes little sense for Amazon to suddenly abandon its own shipping service now, he said.

"Amazon likely looked at its spreadsheet and saw it was losing money so they decided to pause it," Rosenberg said.

Launched in 2018, Amazon Shipping is its own in-house shipping service that picks up packages from sellers and delivers them to the end customers. The beta service first launched in Los Angeles but later expanded to other cities in the US.

The suspension could also be due to negative feedback from the beta-testers. 

Ed Urbaniak, a third-party seller based in Baltimore, told Business Insider that he's been testing Amazon's shipping service since last July. While the service offered great shipping rates — sometimes 50% cheaper than competitors like UPS and USPS for a standard package — it wasn't the most reliable carrier as it lost a third of his shipments in the first few months, he said. Although the service has improved in recent months, he's still unsure about using it for a broader set of products.

"I really didn't understand why they had so many problems," Urbaniak said.

Other sellers who spoke to Business Insider said they were offered the service primarily for packages sold on Amazon and shipped out of their own warehouses. Amazon also offered the service for products sold outside of Amazon, on other online marketplaces, they said.

The announcement comes at a time when Amazon is grappling with a variety of shipping issues due to COVID-19. Amazon has put restrictions on the types of products allowed at its warehouses and sellers have seen shipping delays of up to a month in recent weeks.

Here's the full note Amazon sent to sellers on Tuesday:

At Amazon, we regularly evaluate the requirements of our businesses to ensure we are structured in the best way possible to meet the evolving needs of our customers. After careful consideration, we have decided to pause our Amazon Shipping service in the US. Our last day for pick-ups will be June 5th.

If you would like to discontinue pick-ups sooner than June 5th, please contact us at amazonshipping-contactNY@amazon.com.

We understand this is a change to your business, and we did not take this decision lightly. We will work with you over the next several weeks so there is as little disruption to your business as possible, and encourage you to take the next several weeks to find alternative shipping providers. As of June 5th, you will no longer be able to purchase Amazon Shipping labels on ship.amazon.com (http://ship.amazon.com/), Seller Central or through third-party partners; however, if you need additional time to transition to another shipping provider, we'll work closely with you to find a solution.

Our team is available to help you through this transition. For any questions or concerns related to this communication, please reach out to amazonshipping-contactNY@amazon.com, through June 5th. For other business questions or concerns, please reach out through the Contact Us feature. We will respond to you as soon as possible.

It has been a pleasure working with you, and we thank you for your partnership.

The Amazon Shipping Team

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