I have written several articles and industry reports about the fact that I believe Amazon will generate an additional $50B to $60B to the bottom line by greatly expanding programs to provide companies with supply chain management and logistics services.
According to reports, Amazon has expanded its suite of products and service offerings related to logistics and supply chain management.
“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 VP of worldwide selling partner services.
“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.” Mehta said in the post. “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.”
Amazon is offering its third-party sellers an end-to-end solution designed to move products directly from their manufacturers to their customers.
Called Supply Chain by Amazon, the fully automated set of supply chain services includes Amazon’s logistics, fulfillment, and transportation capabilities. The e-tailer 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.
According to Amazon, 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. I refer to this as “forward deployed inventory.”
Amazon has extensive opportunities for growth by becoming the AWS of supply chain management and logistics. Amazon is stepping up its competition against companies such as Shopify, Walmart, WareIQ, and others via enhanced fulfillment and distribution for sellers regardless of their size.
Flexport is expanding its own supply chain services into an end-to-end solution, including an acquisition of Shopify Logistics and Deliverr. Amazon has effectively made Flexport obsolete and irrelevant with its announcement, and Flexport’s valuation will be lowered.