New End-to-End Supply Chain Product a Likely Home-Run for Amazon
Amazon’s end-to-end supply chain package, revealed this week, could be a huge success, judging from initial reactions, as the benefits for merchants seem likely to overcome reservations about sharing business data with the e-commerce giant.
Supply Chain by Amazon deviates from the firm’s previous Amazon offerings, as it moves up the supply chain. Combining established with new services, it matches the warehousing and distribution, fulfillment, and inventory replenishment offerings with global logistics, offering merchants an integrated end-to-end service.
“It was more a matter of when this was going to happen. They already had the network pretty much put together. This is a huge area of opportunity for Amazon to grow the business.” - John Haber, chief strategy officer at Transportation Insight
The service targets independent merchants, which constitute a large market. By some estimates, 60% of the products sold on Amazon are from such sellers. Moreover, the company assured merchants, when it unveiled the service at its annual Accelerate seller conference, that they could also use the service for other sales channels, including online and physical stores.
Rick Watson, founder & CEO of e-commerce specialist RW Commerce Consult, said Supply Chain by Amazon was designed to keep products in stock and to ship faster and more reliably, at significantly lower costs – “the holy trinity of logistics, and all critically important priorities for all brands”, he commented. “Especially at this moment, this message is literally pitch-perfect, from what I am hearing from my own clients.”
Supply chain management is not a core competence of most sellers, Mr Haber pointed out, and an integrated end-to-end service allows them to concentrate on their core business. We agree. And would argue that this is why there is this trend towards and inevitability of outsourced Supply Chain as a Service.
“They realise they need expertise in logistics. It’s a huge percentage of their overall cost, higher than for a manufacturing company. Tech integration is a huge obstacle for companies of all sizes. It’s costly, difficult and it takes a lot of time. This could be a very good solution for a lot of people,” - John Haber, chief strategy officer at Transportation Insight
We would just point out that another good solution and cost-effective way to achieve this for companies of nearly all sizes would be to partner with a 4PL Supply Chain as a Service provider, like Nucleus.