Amazon has taken another step forward in the development of its logistics services. Last week, the company announced the launch of a new product called “Supply Chain by Amazon” which it describes as “an end-to-end, fully automated set of supply chain services that will provide sellers with a complete solution to quickly and reliably move products directly from their manufacturers to customers around the world”.
This service seems to be just aimed at Amazon’s ‘sellers’ or ‘merchants’, who are independent businesses who sell through Amazon’s website. Although these companies already have the option to use Amazon’s logistics services, particularly its fulfillment services, the new “Supply Chain by Amazon” goes much further and may indicate that Amazon has ambitions beyond the ‘sellers’.
The new service offers an ‘end-to-end’ capability, which Amazon describes as the ability to “pick up inventory from manufacturing facilities around the world, ship it across borders, handle customs clearance and ground transportation, store inventory in bulk, manage replenishment across Amazon and other sales channels, and deliver directly to customers”.
This service includes freight buying capabilities in “cross-border” transportation, which implies the ability to give discounts on sea and air freight as a result of Amazon’s buying leverage. Road freight services into Amazon warehouses can also be purchased by ‘sellers’, on which Amazon is also suggesting the possibility of discounts. Amazon is also offering “automatic” inventory replenishment at its fulfilment centres, utilising both physical capabilities but also its forecasting tools. Finally, Amazon is developing a “Multi-channel” fulfillment capability that includes supporting physical shop locations “not just on Amazon”.
Judging by Amazon’s statement, the new ‘Supply Chain by Amazon’ offering is more ambitious than what Amazon has offered before. The service is vertically integrated and reaches across most of any retailer’s supply chain. Parallels might be drawn between ‘Supply Chain by Amazon’ and the sorts of capabilities being developed by some container shipping lines, although the resources and breadth of Amazon are vastly greater. Indeed, the implication from some of what Amazon is saying is that these services could be relevant to operations beyond Amazon’s own sales footprint. That would be a significant challenge to much of the logistics sector.
Author: Thomas Cullen
Source: Ti Insights
Supply chain strategists can use GSCi – Ti’s online data platform – to identify opportunities for growth, support strategic decisions, help them stay abreast of industry trends and development, as well as understand future impacts on the industry.