Amazon’s Global Supply Chains Amazon.com Inc.—typically referred to as just Amazon—has ranked among the top companies for years in the “Gartner Global Supply Chain Top 25″ ranking. Other regular entries among the companies with the best global supply chains include Unilever. McDonald’s. and Intel. Amazon is passing through about $160 billion in sales via its global supply chain channels and partnerships annually, a staggering amount given that the company seldom takes possession in any true sense of the products that it channels to customers from various companies. Amazon is based in Seattle, Washington. It has now become the largest online retailer in the United States, surpassing Walmart as the most valuable retailer in 2015 by market capitalization (but Walmares revenue is still gigantic at about 5500 billion annually). Amazon started in 1994 as an online bookstore but has diversified to a variety of products, including music downloads, furniture, food, and almost all consumer electronics. These days, customers can seemingly buy anything they need via the Amazon platform. In the United States alone, roughly 150 million customers per month visit Arnazon.com. But this massive availability of products also puts a strain on Amazon’s global supply chains. As customers, we have come to expect that Amazon will deliver whatever we buy in the shortest cycle time possible. often no more than two days, especially if a customer is signed up for Amazon Prime. The Amazon Prune service includes free two-day shipping (on many products), video streaming, music, photos, and the Kindle lending library for an annual fee (currently $99 per year or 510.99 per month). All these services are welcomed by customers, but the free two-day shipping is really what drives the Amazon Prime service. The free two-day shipping (and a myriad of other shipping alternatives for a fee) requires Amazon to leverage its inventory management practices, global supply chains, and technology to cost effectively reach customers. Delivery speed and efficiency require Amazon to have strategically located fulfillment centers worldwide that can be used by select vendors on the Amazon platform. This includes strict requirements for packaging. labeling. and shipment. Amazon stores these vendors’ products in bulk or in individual -mckable” locations. So far, in addition to the United States. Amazon has retail websites for Australia. Brazil. Canada, China. France. Germany. India. Italy, Japan, Mexico, the Netherlands, Spain, the United Kingdom, and Ireland. And, the Amazon Prune service places great strain on Amazon’s supply chains where it is available in its worldwide locations (e.g., Canada, France, Germany, Italy, Japan, and the United Kingdom). In addition, Amazon’s customer service centers span some 15 countries worldwide. Plus, the company operates retail websites for international brands such as Sears Canada, Bebe Stores, Marks & Spencer, Mothercare, and Lacoste. This means that Amazon is benefiting from both its global supply chains for delivery of vendors’ products and its service as a technology supply chain vendor to businesses. Another interesting development—or. at least, idea at this stage—is the speculation that Amazon is thinking about launching a global shipping and logistics operation that can compete with United Parcel Service (UPS) and FedEx. Of course, Chief Financial Officer (CFO) Brian Olsaysky downplayed Amazon’s ambitions on this front. He said that Amazon was just looking to supplement its delivery partners—not replace them—during the very busy peak periods like the holiday seasons. Sources: Todd Bithop. -.kmazon Sales Rise, 2:.!. to 5.13.7B. Profit Beau Expectaboat Bin Stork Slips on Revenue Min? Gaetitae. Febtuuy 2.2017; Spencer Soper. “A=zon Building Global Delivety Butt= to Take On Alitoba.” Bloombeg liehralogv. Filmy 9.2016N. Walt. “How Jeff Bee Aisle to Coco= the Next Ttillien-ciollar Market.- FOMPS. January 1. 2016; B. Stone. -The Secrets of Reno:: How won Became the Everting Store.” Bloomberg Sageez. October 10. 2013; A. Cuttbertsee. “Amazon Buries Zemin. .kpocal.pie Choate in Tees of Sews” Kewameek Fenny 11. 2016.
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Case Discussion Questions
1. Do you think Amazon will become customers’ favorite retail shopping interaction, taking over the retail shopping from companies like Ilhlmart and Target, for example, in the next few years? Will customers buying commodity products such as toothpaste and other relatively low cost items want to do that in brick-and-mortar stores or have it shipped directly to their doorstep in two days or less? 2. Some people say that the prices for the product associated with Amazon Prime are always higher than if you buy the same product on Amazon or elsewhere without the guaranteed two-day shipping. But what do you think customers are buying when they use Prime-the quick service of getting it in two days or the guarantee that they will get the product in two days? 3. Should Amazon, and companies like it get into the supply chain and logistics business and start having their own shipping platforms? Do you think operating global supply chains can become one of Amazon’s core competencies, is it already a competency they profit from, or should they focus on simply connecting buyers and sellers online?
