Amazon’s 3PL business has shipped 70% more orders for sales channels like TikTok so far this year. Its business shipping goods for off-Amazon orders is growing faster than on-Amazon sales.
Sellers who outsource fulfillment to Amazon using the FBA service can also use that inventory to fulfill orders in other sales channels, including marketplaces like Walmart, social commerce apps like TikTok, and direct-to-consumer websites. That’s called Multi-Channel Fulfillment (MCF).
“Amazon MCF has grown to serve over 200,000 U.S. sellers and has seen a 70% year-over-year increase in the total number of orders that have been fulfilled by MCF so far this year.”
— Amazon during the Amazon Accelerate conference in Seattle
Neither Amazon, Walmart, direct-to-consumer nor any other marketplace is growing 70% in the U.S. Except for TikTok and Chinese apps Shein and Temu. Thus, TikTok is likely the key driver behind that 70% growth because it will sell billions this year, having launched just twelve months ago. And Amazon couldn’t have drastically increased the number of sellers using a service that has existed for over a decade. Also, Walmart, the second biggest channel for many sellers, has its own FBA equivalent, Walmart Fulfillment Services (WFS), which most sellers use. Coincidentally, Walmart also introduced a multi-channel fulfillment expansion for WFS in August.
Amazon MCF has existed nearly as long as FBA has but remained a niche service because it wasn’t always priced competitively (it also always charged more to fulfill off-Amazon orders), didn’t allow unbranded boxes, and wasn’t as reliable or sometimes even as fast as decided 3PLs. Amazon has addressed some of those — for example, it made the service faster this week by reducing shipping speeds from 5 to 3 business days — but it remains a backup or stepping stone 3PL for most sellers.
Amazon can’t make the whole world shop on Amazon. But, it is trying to be the retail infrastructure even when shopping happens elsewhere. Hiding behind all the attention Amazon’s e-commerce market share has received — it sits at around 40% in the U.S. by most estimates — are Amazon’s efforts to reroute some of the other 60% through its fulfillment (MCF, Supply Chain, and many more) or payment services (Buy with Prime and Amazon Pay). In that context, the 70% growth figure is alarming.
