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Amazon may let indie merchants ship directly to Prime customers

Such a move could expand the number of items available for free, two-day shipping and ease logistics at the world's biggest e-commerce company, according to reports.

A worker registers incoming goods at an Amazon logistics center in Germany. Third-party merchants may be able to skip this step and ship directly to customers. Getty Images

Amazon already offers more than 20 million items for free, two-day shipping under its $99-per-year Prime membership. The number of eligible items may be increasing, perhaps substantially.

The e-commerce giant has been reaching out to some third-party merchants to explore letting them ship their goods directly to customers under the free-shipping program, Recode and the Wall Street Journal reported Thursday, both citing unnamed sources.

An Amazon representative didn't immediately respond to CNET's request for comment.

Currently, third-party merchants selling on Amazon need to send their products to Amazon's warehouses to be eligible for the free-shipping program. That requirement can increase costs to those merchants and cut down on the selection for customers. By allowing merchants to ship straight to customers, Amazon could allay both of those issues and also make its Prime membership more desirable. Prime membership, which also includes a streaming video service, is a critical growth engine for Amazon's main retail business because Prime members tend to do more of their shopping with Amazon.

Amazon for years has built up its warehouse and logistics operations to allow it to ship items within a two-day window. It's now expanding a US program called Prime Now to get customers a smaller selection of items within two hours. However, a move to allow third-party merchants to ship directly to customers under Prime could face challenges because Amazon would have to stake the reputation of Prime on other companies.

A change to expand Prime's catalog could help Amazon expand its Prime membership rolls, especially as Amazon stares down new potential competitors. New challengers include, a highly anticipated US startup that has yet to launch publicly, and Alibaba, China's largest e-commerce company that is eyeing the global market for growth. Meanwhile, Walmart this summer will begin testing free, three-day shipping for an annual $50 fee.