Amazon Supply Chain is composed of complex processes and facilities that work together to efficiently process customer orders and transport them from one place to another.
Understanding Amazon Supply Chain can be beneficial for third-party sellers using Amazon FBA as they can leverage Amazon’s advanced logistics network to increase the speed and inventory management efficiency of their eCommerce businesses.
Here are some of the essential things you should know about Amazon’s Supply Chain that can help you improve your Amazon business.
What Is Amazon Supply Chain?
Amazon Supply Chain encompasses all the key elements contributing to successful product delivery to customers, including product warehousing, tracking, marketing, shipping, inventory, and more.
As part of Amazon supply chain strategy, the retail giant optimized its supply chain management to ensure efficient and effective performance at all times. Such optimization includes both Amazon’s own efforts, and those of the sellers using Amazon’s warehouses for storage and shipping.
Amazon Supply Chain and FBA
Amazon FBA, or Fulfillment By Amazon, is an Amazon program that allows sellers to use Amazon’s vast logistics network and customer service for their Amazon stores. It is an integral part of the Amazon Supply Chain.
Third-party sellers can send inventory to Amazon’s warehouses. When an order is placed, Amazon handles the pick-up, packaging, and delivery of the product, as well as customer service and returns.
Through FBA, a third-party seller can utilize Amazon Supply Chain’s state-of-the-art facilities, processes, and most efficient transportation modes for package deliveries.
How Does Amazon Supply Chain Work?
Amazon’s supply chain process involves the seller setting up FBA shipments in Seller Central, providing information about the number of products, size, and weight, and ensuring each product has a scannable barcode.
The shipments are then delivered to the designated Amazon fulfillment centers by an Amazon-partnered carrier. Amazon employees then unload and receive the shipment.
After receiving the products, barcodes are scanned to connect each package to the seller’s inventory. Afterward, the products are then stored or distributed to other fulfillment centers.
When a customer places an order, warehouse workers and robots pick, package, and label the product, sort and load it onto a truck or plane, and then deliver it to the customer’s doorstep.
Elements of Amazon Supply Chain | Fulfillment Centers
Some factors why consumers prefer to shop on Amazon include the ease of the purchasing process, delivery speed, and same-day delivery. Such ease is made possible by Amazon’s supply chain strategy.
Behind the scenes, there are crucial elements of Amazon supply chain that work together to provide a seamless shopping experience for customers; and these include the following:
Amazon Fulfillment Network
From warehousing to product delivery, Amazon depends on its fulfillment network. Amazon’s fulfillment centers support the processing of Amazon orders. Currently, Amazon has 175 fulfillment centers worldwide.
These fulfillment centers serve as storage for inventory, ensuring that products are readily available to meet demand from any location. Hence, making it a vital element of its supply chain. This is what the fulfillment network of Amazon consists of:
Sortable Fulfillment Center
These facilities are used for picking, packing, and shipping customer orders for items such as books, toys, and household items. In this facility, Amazon employees work alongside robots which helps to improve efficiency to better meet customer demand.
Non-sortable Amazon Fulfillment Center
Unlike the previously described facility, non-sortable fulfillment centers are utilized for handling, packaging, and dispatching more oversized and bulky customer orders, such as outdoor furniture and equipment.
In sortation centers, employees separate customer orders based on their final destination and combine them for quicker delivery. Thanks to the availability of both full-time and part-time staff at Amazon’s sortation centers, Amazon can offer daily deliveries, including Sundays.
The Amazon associates in receiving centers help in customer order fulfillment by receiving and processing large quantities of inventory expected to sell quickly. Orders are then distributed to various fulfillment centers within the network.
Amazon’s fulfillment operations are also backed by other types of facilities that handle specific types of products. Specialty centers are also utilized during high-demand periods like the holiday season, which improves customer satisfaction.
These buildings are responsible for preparing orders for the final leg of delivery to customers. Amazon’s delivery providers enable quick and regular shipping.
Amazon Delivery Fleet
Amazon uses many logistics and delivery partners to deliver customer orders on time. After sorting the Amazon packages based on delivery destination, the most efficient mode of transportation is then selected to transport the packages.
Amazon’s delivery fleet includes air transport and land vehicles such as vans, trucks, and bikes. And most recently, Amazon has launched drone deliveries for California and Texas.
Humans and Robotics
While Amazon’s vast network of employees enables it to make fast deliveries globally. However, with the incorporation of advanced technology and automation, the supply chain ensures more smooth and more efficient processes.
In its warehouses and fulfillment centers, Amazon employs robotics to handle tasks such as picking and packing orders and stacking and storing inventory.
The integration of Amazon robotics in the supply chain of Amazon enables accelerated operations while reducing manual labor. This, in turn, allows more time and resources to be devoted to other business goals and activities.
Benefits of Amazon Supply Chain for FBA Sellers
FBA sellers can maximize their business potential with the help of Amazon’s Supply Chain. The supply chain of Amazon allows you to ship your products to a fulfillment center and have Amazon handle the packing and shipping to individual customers.
While there is a fulfillment fee, the benefits of using FBA make it worthwhile. Some of these Amazon FBA benefits include:
More Savings: Amazon FBA eliminates the need to hire and train employees to perform specific tasks, such as shipping and handling of Amazon returns.
Time-Saving: Amazon handles customer service and returns, so you don’t have to spend time on these tasks. You can instead dedicate your time to other essential tasks.
Remote Management: With access to Seller Central, you can monitor and manage your business from any location. The Seller Central Dashboard is user-friendly and feature-packed.
Expansion Opportunity: Amazon’s supply chain infrastructure allows sellers to expand their business. Amazon sellers can easily access these resources to grow their businesses.
Amazon Supply Chain allows you to take advantage of Amazon’s sophisticated fulfillment network and manage your business remotely without worrying about the hassles of shipping and customer service.
Improving Business Success on Amazon
Amazon’s back-end operations consist of a complex network of Amazon fulfillment centers and delivery fleets. The supply chain of Amazon aims to alleviate the burden on Amazon sellers by continuously improving its personnel performance, distribution hubs, and technology to decrease shipping times.
Apart from relying on Amazon’s initiative and innovation to provide consumers with high-quality service, you can also proactively perform tasks that can improve the performance of your business, such as repricing.
With the help of an Amazon repricer, an Amazon seller can offer competitive listing prices This will not only entice shoppers to check your listings, but it will also influence the Amazon algorithm to consider you for the Amazon Buy Box.
By continually improving your business practices, you can expand your customer base. And this can lead to increased customer loyalty and ultimately boost your overall business performance.