When online behemoth Amazon introduced its Prime service almost two decades ago in 2005, it was just the beginning of a game-changing retail upheaval.
With over 175 fulfillment centers around the globe, over 1,137 delivery stations in the USA (with the plans for 331 underway), an innovative drone delivery service, Amazon Prime Air, in the works, the manufacturing of its own products as well as those of third party sellers, including small businesses, Amazon has catapulted from the world of straightforward digital bookselling and media to the head of the e-commerce pack.
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One of the main reasons behind the company’s success is its superior supply chain management. To meet the increasing demand for quick, easy e-commerce purchasing, the retail giant is finding itself at the heart of today’s fast-evolving reinvention of e-commerce supply chain management.
How the Amazon Supply Chain is Shaking Up e-Commerce
The one-time online bookstore is now known for, among other things, its effortless customer experience, technological innovations such as its own VA smart speakers, and even a grocery delivery service via its Fresh warehouses.
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Stiff competition, strict delivery expectations, and an ever-growing demand for quick, easy online purchasing demand a modern e-commerce supply chain that performs at higher levels than ever before. The challenges involved in managing more products, faster turnarounds, and direct-to-doorstep delivery requires continuous assessments and thorough logistics evaluations.
Put simply, those who thrive are built to be nimble, and Amazon has adapted to the changing times with ease by leveraging technological innovation and strategy. These have been the driving forces behind Amazon’s warehouse designs and warehouse processes.
The Amazon supply chain is one of the most advanced around, with an organized and smooth-sailing logistics network (as well as its own third-party logistics businesses) that enables the company to deliver packages in as little as a day (and sometimes within the same day thanks to Amazon Prime Air capabilities), and partnerships that allow for low-cost production.
Amazon’s Fulfillment Centers
Amazon warehouses collectively have a massive 150 million square feet of space, and in just two decades, Jeff Bezos soared the company to unbelievable new heights. Bezos’ goal was to make Amazon the most “customer-centric company,” able to sell anything, all over the world — even in remote areas.
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Amazon has since become a household name, and, though your local Amazon delivery person might not wear a uniform, Amazon packages are instantly recognizable. To sell products, the company made it easier than ever for customers to shop thanks to everyone’s favorite virtual assistant AI technology, Alexa, as well as its own app.
Everything anyone could ever need, including the most high-demand products, are available on Amazon. Electronics, cosmetics, music, movies, TV shows … you name it, it’s got it — in many instances, at lower prices, too. As a result, Amazon’s sales have now generated $514 billion in revenue.
Warehouse Automation Beginnings
Taking advantage of the expanding presence of the Internet of Things (IoT), Amazon jumped ahead of the curve yet again when it introduced Amazon Dash in 2015.
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Amazon Dash was an integrated, Wi-Fi-connected, push-button device that allowed customers to create shopping lists by scanning barcodes, and could even be voice-controlled (users just have to say the product names out loud).
When the Dash button was pushed, it would order consumers’ most-used products. Everyday items like soap, paper products, coffee, and peanut butter could all be refilled with the touch of the Amazon Dash button.
However, by 2019, the Amazon Dash series had become obsolete due to the growing popularity of product subscriptions, voice-activated shopping using Alexa, and automatic reordering; in March of that same year, the series was discontinued by Amazon.
Current Digital Warehousing Technologies
Amazon has put a lot of money towards warehouse mechanization and inventory management, and, after purchasing robotics company, Kiva System — now known as Amazon Robotics — which creates robots (now the company has upwards of 200,000 robots.
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Since 2015, the company has powered fast, accurate picking and packing processes across an expanding network of warehouses. The fleet of automated technology grows each year by thousands of units and shows no sign of stopping.
These robots bring the objects to the warehouse worker responsible for picking, but we can soon expect to see everything in these warehouses fully automatic, which may lead to a decreased number of employees.
In-House Expertise
In spite of Amazon’s tech-savvy flash (yes, we mean the air hub designated Amazon Prime Air in particular), perhaps the most deeply disruptive element of the retail giant’s logistics strategy is its outsourcing — or more specifically, its lack thereof.
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As delivery demand increases, Amazon is pulling logistics in-house. Amazon has been able to accomplish this by building large regional fulfillment centers and sorting centers that, using digital product warehousing technologies, are both agile and automated.
Amazon’s Own Delivery Business
From custom delivery vehicles to robot-powered distribution centers and automated warehouse systems to the Amazon Air carrier plans — Amazon’s cargo airline — that is in collaboration with the Air Transport Services Group, Amazon handles each order as completely as possible, from start to finish.
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In addition, Amazon’s own delivery business, Amazon Freight, has also taken off. This Amazon trucking venture, according to the company, is its “middle-mile logistics technology solution for anyone looking to ship road freight.” Amazon Freight allows any Amazon seller to ship palletized shipments or full truckloads directly to its Amazon fulfillment centers, or even to non-Amazon facilities at competitive prices.
As a further convenience, the company offers Amazon Hubs (previously known as Prime Now Hubs), which are a network of pickup locations all over the world, allowing businesses with physical locations to offer secure package pickups and returns to customers who buy their products via Amazon.
High Responsiveness
The two-day shipping and delivery time promise of Amazon Prime allowed for more than just enhanced convenience; it completely transformed an entire industry. Amazon revolutionized the industry again when it introduced one-day delivery. Quick, simple, and free — it doesn’t get much better than that.
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As competitors have begun to catch up, however, the stakes have been raised, and in 2014, Amazon introduced Prime Now, offering one-hour deliveries to customers in select regions. Users can order takeout or groceries, schedule a custom drop time, and more.
Enhanced Ease
The driving theory of “anything you can do, I can do better” doesn’t stop with the Amazon delivery van. The retailer and distributor added private-label brands to its extensive portfolio, producing an ever-growing catalog of custom goods. Lightweight electronics, home goods, baby care items, and even dog food bags come straight from AmazonBasics.
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Do Amazon’s in-house products stand a chance against established brick-and-mortar competition? With its acquisition of the Whole Foods brand and its growing network of physical stores, you may find AmazonBasics products on neighborhood shelves sooner than you think.
Employee Protection
Amazon has also invested in more high tech to improve working conditions and help keep the human warehouse employees that work side-by-side with the robots in an Amazon facility to fulfill orders safely. In early 2019, Amazon rolled out the Robotic Tech Vest, a sensor-laden piece of wearable equipment with collision detection technology designed to help warehouse workers and robots avoid collisions.
Business Training
In order to expand reach and get even more businesses selling on its platform, Amazon provides seller training, with many events, webinars, development tools, and even the Seller University that offers a series of free training videos to teach companies how to successfully sell on Amazon. Lessons include the creation of product listings, understanding product rules and restrictions, advertising, and promotions. The courses even offer advice on taxes and everything they need to know about Fulfillment by Amazon (FBA).
Sustainability
Amazon claims it is committed to a more sustainable future, with attempts to reduce packaging (and even make sure that the box sizes are a bit more suitable for the contents) and increase the use of recyclable materials in its original boxes. Although aware that plastic is lighter and makes for lower carbon emissions, Amazon is not keen on using the single-use material.
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However, the company is constantly working on how to find ways to minimize waste as well as carbon emissions. The company says it has “teams of scientists and other experts who are constantly working to reinvent how products are shipped for the good of customers and the planet.” Though there has been some advancement in this area, the company is not yet satisfied and is continually working to find better solutions.
The Future of Amazon’s Supply Chain
Looking to the future, Amazon’s tech-centric, one-stop strategy and advanced supply chain are poised for nothing but growth.
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While we’ve yet to see drone delivery available at customers’ whims (but are confident that it’s coming very soon), Amazon proves time and time again that it’s committed to staying ahead of the technology game. Insourcing and innovation keep per-unit supply costs to a bare minimum, and innovative strategy and technology keep processes quick and efficient. Any business will do well to look to this e-commerce leader and emulate its strategies in relation to increased productivity, profit-building, and expanded reach.
So what else can we expect from Amazon in the near future? Are robot servants next? We can only wait and see.
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