‘Supply Chain by Amazon’ aims to simplify seller operations, lowering costs and getting products from factories to customers more quickly and efficiently.
Since announcing its vision for an end-to-end, fully-automated set of supply-chain services that provides sellers with a complete solution to quickly and reliably move products directly from their manufacturers to customers around the world, Amazon has worked to deliver against this idea to revolutionise the supply chain landscape.
Through Supply Chain by Amazon, sellers can leverage Amazon’s advanced logistics, warehousing, distribution, fulfilment, and transportation to move products from factories to customers faster than ever before, reducing shipping times and saving sellers time, effort, and money. Hundreds of thousands of sellers already use at least one of these Supply Chain by Amazon services, with adoption of multiple services tripling in the first half of 2024. Now sellers have a fully managed option where Amazon provides forecasting and optimisation, and manages the flows between these supply chain services.
Using Supply Chain by Amazon has been transformative for Amazon seller Steve Neufer, co-founder of Juvo+, which creates high-quality products that improve people’s everyday lives. “Having Amazon partner with us on our end-to-end supply chain has been a game changer that’s great for our business,” said Neufer. “The speed and reliability of its logistics services has enabled us to keep our products in stock with less working capital while delighting customers with lightning-fast deliveries. Customers react strongly to being able to get a product same day or next day, and we see our sales conversion roughly double.”
Maximising inventory efficiency
Amazon is rapidly scaling global logistics, enabling worldwide product movement from manufacturing hubs, across borders, through customs, and arriving in destination countries. Amazon moved more than 20,000 containers globally in August. In terms of domestic logistics, the company allows sellers to book transportation at up to 25% lower cost, compared to alternatives. Domestic logistics services are now available in 19 countries, and in just the U.S., sellers have used our domestic logistics services to send 2 billion product units into our fulfilment network since this time last year.
Sellers also need low-cost warehousing to store products in bulk so they can quickly replenish them to fulfilment centres and physical stores that service customer orders and shopping. Amazon Warehousing and Distribution (AWD) offers this solution at a great value, and we’re connecting AWD with more fulfilment centres and transportation lanes to accelerate U.S. product delivery. This year has seen a quadrupling of AWD capacity in the U.S. to support explosive growth in seller demand.
Multi-Channel Distribution has been introduced (MCD) as a new feature for AWD, supporting sellers in distributing products in bulk across their sales channels. MCD significantly streamlines the supply chain process for sellers by allowing them to hold one unified inventory pool in AWD that can serve all their channels, rather than having to allocate inventory to each channel from the start – which can be costly if it turns out to be too much inventory or lead to missed sales if it’s too little. Sellers are finding that consolidating into a single pool in AWD reduces total stock needs by 20% on average – a significant capital savings – and prevents stockouts, which means sellers also drive more sales. MCD also launched the ability to do custom labelling, enabling sellers to distribute products in bulk to numerous different sales channels, including other marketplace services, wholesalers, distributors, and sellers’ own physical stores.
Introducing the fully-managed option
Amazon’s Fully-Managed Supply Chain by Amazon solution makes the supply chain more turnkey than ever before. Sellers can continue to choose which supply chain services they want to use and manage decisions on product movement on their own, or they can have Amazon automate the movement of products through these supply chain services with the fully-managed option. Sellers simply provide product details and pickup locations and Amazon oversees the rest, including carrier pickup, inventory consolidation, strategic replenishment and placement into fulfilment centres nearest to customers, and continuous analytically-driven optimisation based on demand, inventory levels, and costs. It’s as easy as pushing a button, and sellers reap the benefits of working capital gains, increased sales, and a lot less effort. When sellers use this service, they qualify for AWD integrated rates, including a 25% discount on AWD storage fees and a 15% reduction in AWD transportation and processing costs – making it an even greater value. With Amazon’s years of supply chain expertise, we can keep products in stock, at the right locations, to deliver to customers at the fastest speeds ever. For sellers, rapid delivery is a big boost to their businesses because it drives increased sales conversion, and in fact, sellers are seeing that by using the fully-managed option and having Amazon improve their delivery speed, their sales are increasing by an average of 20%.
“Becoming an expert in supply chain is not how sellers win,” said Neufer. “We win by making better products and delivering for the customer. Amazon is an expert in supply chain. Instead of shouldering every aspect of inventory, logistics, and customs, Amazon is a great partner for businesses of all sizes because they help take that on for us. This frees up time and energy to focus on elevating brands, understanding customer needs, and building great products; that’s how sellers really win.”
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