Amazon supply chain strategy is a good-working system built by Jeff Bezos and Amazon staff. Any retailer can learn from it. Amazon has optimized every stage of their supply chain, they even have launched their delivery network, added drones and other hi-tech features to the whole pattern. Amazon's supply chain contains the whole logistics cycle.
Let’s take a look at an example. Their FBA scheme works as follows:
So, as we can notice from the above, Amazon supply chain management is based on 4 main points:
We now will go through each of these points to see how important they are for Amazon.
Company’s warehousing strategy takes the first place, and all sellers have to know why. Amazon wants to make sure that products sold on their marketplace are accessible anytime from any place on Earth.
All Amazon’s warehouses are situated near large population hubs. They have well-formed communications and logistics network allowing to transport products from one place to another. Amazon has even put small warehouses near not very large towns to improve the customer experience of those people who don’t live in megapolises. No matter what and where is purchased, Amazon strives to make every purchase the best one.
Inside Amazon warehouses, everything is also strategically structured. Each warehouse has 5 storage areas, there are robots which pick and pack products and move them from one place to another if necessary.
Plenty of various delivery options is what makes Amazon different from other retailers and marketplaces. Users of Amazon Prime can receive their orders in several hours or less. People who don’t want to wait for several days while their order is arriving can use fast Prime delivery.
As for other logistics network, Amazon uses a great variety of shipping ways. For example, we were discussing one of them not so long ago. Their Last mile program shows that fast delivery means much to the eCommerce giant.
Except for trucks, air, and sea delivery, they own drones (for Prime Air users) which can land orders on shoppers’ backyards.
UPS, FedEx and USPS companies deal with Amazon logistics as well.
All this allows the company to manage hundreds and thousands of orders every day and stay one of the best eCommerce players ever.
Amazon’s supply chain management includes technology, as you could already understand from the previous points about drones and robots. These automation solutions are here to pick and pack orders, as well as deliver them to your customers.
Technology helps Amazon fulfill orders as quickly as possible and save on staffing costs. So, they free funds for investing them in improving other supply chain areas.
As for the Prime Air program, it is not full-functional yet, but we assume this a matter of time. Customers who want to take advantage of using this program with drones need special Amazon landing mats.
As we all know, Amazon cooperates with third-party sellers, still, the company has found out that they can produce all these products for cheaper prices and get more profit if they order their own procurements. Manufacturing of such low-cost items and white-labeling items from third-party sellers have become part of the whole Amazon supply chain strategy.
They now offer branded lines in anything from products for pets to household goods, and the list is constantly growing.
What’s more, manufacturing products allows Amazon to control the whole cycle of creating and selling products. They produce, store, and ship them.
All in all, Amazon uses supply chain and logistics management to know more about internal business processes and to earn more funds. However, they have customer experience on the top of their interests, so this is #1 in the list.
And even not looking at the fact that Amazon has one of the most well-tuned strategies regarding this, they continue to bring innovations to the process. Amazon provides supply and value chain analysis and keeps improving the overall strategy.