Supply Chain by Amazon is poised to be a major draw for third-party sellers looking to simplify their logistics — if they can place enough trust in the e-commerce giant, writes Supply Chain Dive (Oct. 16, 2023). The end-to-end suite of services, just launched, is billed as a one-stop shop for sellers’ supply chain needs, helping them avoid juggling multiple logistics providers. Amazon can pick up inventory from manufacturing facilities, ship cross border, store and replenish inventory and deliver to customers, among other services.
Few companies can rival Amazon’s robust supply chain network and logistics capabilities, but it will take more than infrastructure for sellers to fully embrace Supply Chain by Amazon. A key for its success is to ensure sellers are comfortable enough to willingly cede more management of their supply chain to Amazon. One concern Amazon may need to assuage is how it handles data from its users.
Amazon has long faced scrutiny of how it handles seller data, and the recent lawsuit from the Federal Trade Commission also raises issues with the company’s practices. The FTC says that the company corners sellers into using its services and has “failed to adequately protect sellers’ commercially sensitive data, exposing this data to theft and appropriation.”
Sellers still have reasons to lean on Amazon’s expanding supply chain offerings. The fear of giving the company more control is decelerating among brands, as companies face difficulties raising capital and improving their own supply chain efficiencies in an uncertain economic environment.
The suite of services presents a high upside for smaller companies, as it helps them more easily comply with international trade rules and regulations. For large sellers, it may not work as an all-encompassing solution, but it can complement their existing arrangements with traditional freight forwarders and carriers.
One potential gap for Supply Chain by Amazon is its fit with mid-sized sellers, as these businesses would want help in their sourcing from countries beyond China. The cross-border transportation component of the service currently allows sellers to ship cargo only from mainland China and Hong Kong. Amazon has plans to grow its number of origin points and making more products eligible for the service.
Classroom discussion questions:
1.What is the supply chain service that Amazon is offering?
2. What are the advantages and disadvantages of joining Supply Chain by Amazon?