This week at Accelerate, Amazon’s annual seller conference, the company announced Supply Chain by Amazon, an end-to-end, fully automated set of supply chain services that will provide sellers with a complete solution to quickly and reliably move products directly from their manufacturers to customers around the world.
This is effectively a way to streamline supply and cut costs and ‘middlemen’ out of the supply chain. Amazon will assist in getting goods direct from the factory to the consumer, enabling brands (and private label/white label) suppliers to optimise their cost base and logistics, by engaging Amazon to do the heavy lifting.
Amazon are all about reducing cost and inefficiencies in their endless quest to to be Earth’s most customer-centric company. This means that if they can cut wholesalers from adding a margin between factory and delivery to the consumer it’s in their DNA to do so.
This announcement should also enable sellers to reduce the need to ship in bulk from the factory and then onwards ship smaller quantities do various countries around the world, which also adds needless cost and regulatory burdens to the movement of goods. Simply let Amazon ship direct to the countries you wish to trade in!
Supply Chain by Amazon enables sellers to benefit from Amazon’s advanced logistics, fulfillment, and transportation capabilities to keep products in stock, ship faster and more reliably, and significantly lower costs.
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. 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 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.
- 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.
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. 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.
– Dharmesh Mehta, vice president of WW Selling Partner Services, Amazon
Today, selling partners can simplify supply chain management, unlock faster delivery, and get significantly lower costs with Supply Chain by Amazon. The benefits and flexibility will become even greater later this year with the expansion of MCD and AWD storage reservations.
