New supply chain-focused offering is introduced by Amazon

Seattle-based e-commerce giant Amazon said this week it has introduced a new end-to-end, automated suite of supply chain services that are geared towards offering Amazon sellers with a full offering to move products from their manufacturers to customers worldwide.

Entitled Supply Chain by Amazon, the company explained that this offering enables sellers to leverage Amazon’s advanced logistics, fulfillment, and transportation services to keep products in stock, ship faster and more reliably, and lower costs.

“Our vision has always been to make it as easy as possible for sellers to serve customers around the world, and providing our selling partners with a simple, fast, cost-effective solution to a challenge that has become increasingly unpredictable and complex is an important investment in sellers’ success,” said Dharmesh Mehta, Amazon vice president of WW Selling Partner Services, in a statement. “With Supply Chain by Amazon, Amazon will pick up sellers’ inventory directly from their factory, and manage the supply chain logistics through delivery to customers’ doorsteps. Sellers will be able to offload even more of the complexity of their supply chain logistics to Amazon, both for the products they sell in Amazon’s store and through other sales channels including online and physical store locations. We are excited to help sellers, both on and off Amazon, save more money, drive more business growth, and have more time to continue inventing amazing products for customers.”

Company officials said that with Supply Chain by Amazon, Amazon will pick up inventory from manufacturing facilities around the world, ship it across borders, handle customs clearance and ground transportation, store inventory in bulk, manage replenishment across Amazon and other sales channels, and deliver directly to customers. It also noted that sellers can now focus on building great products for their customers and growing their business, while Amazon handles the logistics, reduces costs, and improves delivery speed.

Key benefits of Supply Chain by Amazon cited by the company include:

• Automatic cross-border discounts for Amazon Global Logistics (AGL): Amazon’s new prices now reflect discounts up to 25% on all cross-border transportation that is bound for Amazon Warehousing and Distribution (AWD), further reducing costs for selling partners using Supply Chain by Amazon. AWD is Amazon’s low-cost storage service that provides sellers the ability to store their inventory in Amazon distribution centers and seamlessly distribute products in bulk;
• Streamlined domestic inbound transportation to AWD with Partnered Carrier Program (PCP): In addition to AGL for cross-border transportation, later this year sellers can use PCP to streamline domestic transportation into AWD centers. Sellers can count on reliable and fast transit times with trusted carriers, at up to 25% lower costs compared to alternatives;
• An expanded AWD offering with reduced prices: AWD is now open to all selling partners, giving sellers the ability to store in bulk at discounts of up to 80% compared to Fulfillment by Amazon (FBA) storage fees. With no peak pricing during Q4, sellers can more efficiently manage inventory levels, even during the holiday season. Coming soon, sellers will also be able to reserve low-cost, long-term bulk storage months in advance at even deeper discounts;
• A new Multi-Channel Distribution (MCD) capability: MCD moves sellers’ products in bulk from AWD to any sales channel (including online stores and physical store locations), allowing selling partners to replenish across all their sales and fulfillment channels, not just on Amazon, from a single inventory pool. MCD is currently in pilot with an initial set of sellers and is expected to be available to all sellers later this year; and
• Automatic inventory replenishment with FBA: In addition to the cost savings through AWD, Amazon will now use its advanced machine learning and supply chain optimization capabilities to automatically replenish inventory into the optimal Amazon fulfillment centers to support expected customer demand, allowing sellers to benefit from even faster speeds from FBA and deliver customer orders for off-Amazon channels through Multi-Channel Fulfillment (MCF). Placing sellers’ products in the right quantities and the right locations to meet customer demand increases the potential for same-day and next-day delivery speeds, which in turn drives an average 15% increase in unit sales.

Rick Watson, founder and CEO of New York-based RMW Commerce Consulting, told LM that Supply Chain by Amazon is a mix of old and new.

“The scope of the release is end to end, from manufacturing to customers,” he said. “This is about the ultimate go-to-market manifestation of Amazon's global logistics ambitions. In other words, AWS meets Logistics.  When people ask me will brands trust Amazon, I think the answer is yes, with time. Look at it this way, so many people trust AWS. It's not a stretch to think that many growing SMB and mid-market brands could trust Amazon because replicating this level of scale and reliability may be nearly impossible otherwise. Especially if Amazon continues to lower costs and improve the service like it has historically done with AWS. You know the guy who did this? Oh, yeah, Andy Jassy. So, he knows the model. And the infrastructure is already in place. So yeah, this will probably work if they can nail the go-to-market model.”