[Fiveplus]

The text in that attached screenshot is the key giveaway, "Now that most sellers maintain inventory levels that keep products close to customers..."

This looks like a signal that Amazon's fulfillment network has reached a saturation point where the 'distributed cache' model of commingling is no longer necessary for speed. Ten years ago, commingling was a necessary optimization. If seller A (county A) and seller B (county B) both sold the same widget, Amazon treated them as a single distributed liquidity pool to guarantee 2-day prime shipping nationwide without forcing every small seller to split their stock across 10 warehouses.

Now that Amazon has moved to a highly regionalized fulfillment model (where they aggressively penalize sellers who don't have stock distributed across regions), the computational and reputational overhead of commingling outweighs the diminishing returns on shipping speed. For all intents and purposes, they have traded the operational complexity of physical sorting for the software complexity of forcing sellers to manage regional inventory better.

[aserafini]

My recollection (admittedly worked for Amazon >19 years ago) is that there was never any computational overhead to commingling. In fact, the opposite was true: there was a computational overhead to tracking which vendor a specific piece of inventory of a given product came from instead of assuming that all inventory of that product was fungible.

This affected returns as well. For multi-sourced products, we could never guarantee that overstock or damaged items were returned to the original supplier—only that the product matched. Suppliers complained about this a lot.

[withinboredom]

Worked with a guy that used this to his advantage. He sold CD's and DVD's through FBA. He would get them "new enough" looking via buffing them out (often making them unplayable), shrinkwrapping them, and then hope whomever got them wasn't him that got the commission for that sale and instead the person who bought "from him" got one of the actual new ones. He made a killing off of this since "used" inventory was incredibly cheap for a whole pallet of them.

[ajkjk]

There was some overhead to commingling once it got extended to FBA, because in order to increase commingling they did attempt to track inventory provenance information even on commingled inventory.

My first job out of college in 2013 was working at Amazon on one of the teams that was implementing inventory commingling at the warehouse level, and my first big project was implementing this process into the receiving software, which is when inventory arrives at warehouses from vendor/seller trucks and employees scan everything to make database records that lead to paying for the goods. Note: in Amazon lingo "vendor" means a provider of goods that are legally purchased and owned by Amazon in the warehouse, while "sellers" are FBA sellers that maintain ownership of their goods and basically rent Amazon's warehouse services.

The big software undertaking was determining, at inventory receive time, whether we trusted the seller enough to allow their inventory to be commingled with others. If yes we would be "virtually track" the provenance: store in the database a record of the vendor, but if the item became commingled (according to UPC scans as it moves around the warehouse) with other sellers' inventory, blur the information so as to not falsely attribute provenance when it was no longer known. The whole project was based off the cost:benefit analysis that the efficiency and customer experience benefits outweighed the cost of not being able to attribute damage to the correct vendors (particularly the fact that you could ship a customer a product from the closest warehouse that it had it, instead of transshipping it from the warehouse that had the one owned by the person they bought it from).

In cases where sellers were not trusted enough to commingle there were alternate processes that were supposed to track their items individually; the most granular was "LPN" receive, license-plate-number, where every product got an individual UPC to distinguish it from all others. This was borrowed from Zappos, whose one warehouse in Vegas was initially the only one who used this process; I was told that was because the online shoe business heavily relied on letting customers do loads of returns and so it was implemented out of necessity early on. One of our projects was rolling LPN out to more of the North American network. But it was a lot more expensive (in the stickers, labor, data management, and picking inefficiency) so it was dispreferred whenever possible.

At the time the whole commingling initiative was regarded to be a big win for both Amazon and customers. It was fairly janky from the beginning, though, and I'm not at all surprised that sellers (and to a lesser extent vendors) began taking advantage of it as soon as they began to realize how it worked. There were a lot of initiatives around the time I left to provide better accountability in the whole process, but it is ultimately an arms race between Amazon and the merchants and my impression is that for many years Amazon was losing.

It is amusing that they're ending it. I never heard how things were going after I left, but had the impression externally that it was ending up being a disaster, and knowing how it works on the inside it's not a surprise. In hindsight trusting FBA sellers to not become essentially malevolent actors seems comically naive.

[tzs]

> Ten years ago, commingling was a necessary optimization. If seller A (county A) and seller B (county B) both sold the same widget, Amazon treated them as a single distributed liquidity pool to guarantee 2-day prime shipping nationwide without forcing every small seller to split their stock across 10 warehouses.

I don't see why that required commingling. When I click on a Foo in my Amazon search results show me the Foo from whichever of A or B is close enough to meet the 2-day shipping guarantee. If I care which of A or B it actually comes from I can click the option to see other sellers and decide if giving up 2-day shipping is worth getting my preferred seller.

[SPICLK2]

Or a signal that Amazon has reached the required level of incumbency that it doesn't need to worry about speed any more.

[embedding-shape]

Or also signal that they've learnt about exactly how many of us stopped using Amazon because we got tired of receiving counterfeit products because of the commingling...

[pooper]

I see hundreds of tweets by @amazon that reply to people complaining how deliveries miss the dates that amazon dot com promised but then amazon dot com probably delivers so many packages every day that I think it is a bit of column A and a bit of column B here.

[crazygringo]

To the contrary. At least in my area, there are more items with 1-day shipping than ever before.

A few years ago, most stuff was 2-day. Now most stuff is 1-day. And it's constantly popping up options for same-day too.

[Bombthecat]

Here in Germany, Prime delivery increased from one day to two days. Makes it also easier.

[ethbr1]

> They have effectively traded the operational complexity of physical sorting for the software complexity of forcing sellers to manage regional inventory better.

Also total warehouse capacity and warehouse-warehouse freight capacity. +X% inventory duplication (to achieve regional inventory) at Amazon-scale, along a long tail distribution of products, must be non-negligible.

[NetMageSCW]

In my recent experience Prime is isn’t two day often enough for Amazon to be concerned about where they ship from.