Amazon (AMZN  ) is currently performing trial runs of an invitation-only program, FBA Onsite. This acronym stands for Fulfillment by Amazon, which was previously called "seller flex." This program will allow third party sellers to send their stock to Amazon's warehouses, where they will be shipped and dispatched as if they were first-party merchandise. Its purpose is to give sellers more efficient storage and cheaper shipping options. In return, Amazon will reap the benefits of increased flexibility and control over deliveries, while saving money through volume discounts, and avoiding warehouse congestion.

FBA Onsite has began expanding to different locales nationwide, after having initiated a pilot phase in Western states in October 2017. It will enable merchants to incorporate Amazon software and logistics into their own warehouses, while letting Amazon itself (and not FedEx [NYSE: FDX] or UPS [NYSE: UPS]) oversee transportation of vendor packages from the warehouse to consumer homes. FBA Onsite will allow for greater control over delivery, which enables the company to give two-day delivery for a greater number of products. Previously, merchants needed to first send their goods to Amazon's delivery centers, slowing down the process.

On the flip side, this program could disrupt Amazon's long-time partnerships with FedEx and UPS. When recent news about FBA Onsite broke, FedEx shares displayed "minor gains" in trading, while UPS shares dipped 0.26%.

The program first began three months ago, issuing invitations to under 50 sellers. The program's development was triggered by the need to resolve the issue of warehouse congestion. It successfully resolved this problem by putting storage space owned by third-party sellers onto the platform, rather than building more Amazon-owned fulfillment centers. This program will also help sellers save on shipping by reducing the need to transport inventory to Amazon-owned warehouses. It also offers lower shipping rates for two day deliveries, by allowing sellers to take advantage of Amazon's low shipping rates. This can result in discounts of up to 85% from the normal price, for sellers.

The original name of the service was Seller Fulfilled Prime. SFP allowed sellers to ship Prime-eligible products from their own warehouses and not Amazon's, provided they could prove that meeting the two-day time frame was feasible. Whereas SFP does not give the benefit of low shipping rates, Fulfillment by Amazon lets sellers send their inventory to Amazon warehouses, and use Amazon's logistics system. Many sellers currently struggle with warehouse management, and were uneasy about joining the SFP program, given how costly two-day delivery from personal warehouses can be.

According to some experts, the largest advantage of that Amazon possesses is the company's ability to test its delivery system to FBA Onsite sellers, especially with its own trucks and personnel. They believe that Amazon will employ its own logistics and carrier system and seek to counterbalance USPS's final delivery duties with its own delivery services.