supply chain

1. 6 Ways AmazonIsChangingSupplyChainManagement|Prostack
AmazonEffect- Wikipedia
The Amazon Effect is the powerful disruption that eCommerce has made to the retail market.
The term came about as a result of Amazon's dominant role in the eCommerce marketplace and
leading the disruptive impact of the industry.[1]
The effect has been heavily researched by
numerous studies including an in-depth Harvard study by Alberto Cavallo. The Amazon Effect
has been found to cause numerous changes in the retail market. Among these impacts is an
increase in price flexibility and uniform pricing in traditional brick-and-mortar stores. An
externality of the increasing price flexibility and uniform pricing has been a decrease in pass-
through inflation.[2]
Various other studies have revealed that the Amazon Effect has forced retail
malls and offline retailers to create an experience around offline shopping in order to pull
businesses away from eCommerce.[3]
Finally, it has been discovered that eCommerce has
pushed the retailer to increase their incorporation of technology to make offline shopping more
convenient and quicker.
The Internet and emerging technology platforms create endless opportunities for people to search
and shop online. Last year, in 2018, ‘ global e-retail sales’ generated USD 2.8 trillion. This
number is forecasted to reach up to USD 4.8 trillion by 2021. In terms of the number of people
expected to purchase product, there will be 2.14 billion global digital buyers by 2021. How do
these figures relate to the ‘Amazon effect’?
According to Forbes, there has been a significant reduction in mall traffic over the years as a
result of the convenience of online shopping. The article further emphasizes that purchasing
products has also become ‘faster, easier and infinitely more convenient’. The ‘Amazon effect’ is
a global phenomenon that is describes by Investopedia as,
The “Amazon effect” refers to the impact created by the online, e-commerce or digital
marketplace on the traditional brick and mortar business model due to the change in shopping
patterns, customer expectations and a new competitive landscape.
This causes an increase in pressure on retail companies to take a more innovative approach to
selling at both the in-store and online level. However, there is also an incredible amount of
demand on supply chains to meet these growing demands and expectations.
How the ‘AmazonEffect’Impactsthe Future of SupplyChains|Morai LogisticsInc.

2. The Amazon Effect” is the impact that the business has had on the
world since its creation in 1994. This can range from its impact on
traditional brick and mortar business, to the impact it has had on the
shopping trends and expectations of customers worldwide.
In this article, Supply Chain Digital investigates how “The Amazon
Effect" has impacted the landscape of supply chain and
manufacturing in terms of customers, supply chains, and
technology.
On Customers
Due to the always-available and constantly cheap prices that
Amazon is able to offer, customer’s expectations when it comes to
delivery have changed. A few years ago, no one would think twice
about waiting for a few days/weeks for something that they ordered
online. Now, with Amazon even offering same day delivery in some
territories, customers expect the same level of efficiency when
interacting with other suppliers.
This can be a hard pace for smaller companies to keep up with and
is causing similar issues with larger suppliers. The effect has even
gone as far as to reduce physical shop traffic, which has been
reaffirmed by the global pandemic. It is easier for a consumer to
stay at home and order a product to arrive the next day for
convenience. The increasing demand at a smaller price means that
customers are increasingly impatient, and sometimes will choose
products of a lower quality, if it means they can get it faster.
On Supply Chain
As supply chains in their most basic level are responsible for the
delivery of goods from A to B, Amazon has had an effect on them
too. With the increased demand from customers, supply chains
globally are having to develop and adapt to keep up with these
high-volume requests. The use of 3 and 4PL’s are increasing as
their networks and resources are able to rival those of Amazon and
remain competitive.
As a result of this increased demand, supply chains are having to
focus on efficiency and end-to-end traceability. (To learn more
about end-to-end traceability, sign up to our exclusive webinar

3. hosted for HERE Technologies and Sigfox) Only with a focus on the
areas to increase efficiency and reduced costs, can companies
hope to compete with giants such as Amazon.
On Technology
Amazon is at the forefront of the technology revolution when it
comes to supply chains. One example of this is the focus on
pursuing patents relating to drone technology. This ranges
from responsive drones to airborne fulfillment centres.
They have also invested heavily in AI e-commerce tools, such as
those created to detect trends and potential recommendation
fluctuations. Even investing in simple chatbot AI can play a huge
part in staying in the game. The reach of amazon’s influence in
terms of technology can be seen across the supply chain world,
with global organisations increasing investment to stay competitive.
Overall, “The Amazon Effect” can be seen throughout the supply
chain world and has impacts across the rest of the consumer life
cycle. They are a key player leading the way in defining the
direction that e-commerce and logistics are evolving.
4 upsides of the Amazon effect
1. Increased visibility
With the Amazon effect creating demand for more final-mile deliveries than ever before,
consumers will continue to seek visibility in shipping. This will drive transparency
throughout shipping logistics. To meet customer demands, shippers will need more
information about where their products are. This, in turn, will drive efficiencies.
2. Efficiency gains

4. Consumers’ desire for quick shipping creates more shuffling of goods between points to get
them closer to purchasers. Amazon’s logistics model calls for more short-haul trips, with
more trucks traveling directly to purchasers’ homes rather than to distribution centers.
This means every aspect of the supply chain must tighten up. Shippers and carriers must
streamline inventories, orders, the loading of trucks, and routes. Reviewing supply chains
regularly to assess efficiencies will improve overall logistics.
How Amazon Is Changing Supply Chain
Management
Amazon has changed the face of retail through its use of bold supply
chain strategies and the deployment of innovative technologies. The online
retailer's history is one of rapid growth and relentless innovations. It's
reshaping the supply chain and leaving competitors scrambling to catch up.
Rapid Growth
In 2004, 10 years after Amazon was founded, its annual revenue was just
under $7 billion. According to Statista, by 2018, revenue reached almost $233
billion.1
In fact, Amazon is the fastest company to reach $100 billion in sales
revenue, taking only 20 years.2
From its inception, Amazon has been growing
approximately 20% per year. It grew by over 20% from 2018 to
2019.3
Currently, it enjoys nearly 14% of gross global e-commerce
sales.4
Many believe Amazon is aiming for $1 trillion in yearly revenue. If you
take Amazon’s roughly 20% yearly growth rate into the calculation, it should
reach that goal by 2027.
Whether or not the company achieves that goal by then, its transformation
from a simple online bookseller to the most formidable force in the retail
industry is remarkable. One of the driving forces behind that transformation is
its innovative and highly efficient supply chain. Amazon’s continuous efforts to
deliver products to the customers in the shortest possible time are putting
intense pressure on other retail industry giants across the globe and thus
changing the way supply chain management works.
Game-Changing Delivery Strategy

5. Back in 2005, Amazon launched its Amazon Prime service. By paying an
annual membership fee, customers received guaranteed two-day shipping on
hundreds of thousands of products. The introduction of two-day delivery was
the game-changer that established the dominance of Amazon in the online
retail industry. When many other retailers started to catch up by offering their
own free two-day shipping, Amazon tipped the playing surface again by
offering a one-hour delivery with its Amazon Prime Now service (which it has
since changed to a free two-hour delivery).
The company has always made life difficult for its major competitors with its innovative
strategies.
How does Amazon Manage its Supply
Chaiis the world largest and Logistics?
Amazon is now the world's largest e-commerce company in the world. Many small
and medium-scale businesses benefit a lot from Amazon. If you are a curious
person and are entrepreneurial in nature, you might wonder very often how
Amazon supply chain works. The logistics of Amazon are fairly complex and quite
vast. Over the years Amazon has improved its supply chain operations and many
other things. Today Amazon's supply chain is one of the most sophisticated ones.
Warehousing Strategy
Amazon is one of the influential e-commerce companies because of its advanced
warehousing strategy. It has a strategy by which it can locate the desired product
properly. All the products are placed strategically so that they can be found
easily. The products are segregated infrequently demanded and rarely
demanded. Warehouses are optimized really well so that goods can be procured
faster.
They do demand forecasting and keep the products of high demand ready to be
deployed. Apart from that they also follow certain quality control rules depending
on the product so that the customer gets the best quality product.
Sohpisticated Delivery Network
The delivery system of Amazon is very sophisticated in nature. The supply chain is
very well planned which will help the company to deliver the product properly. For
members who have a Prime subscription, their products need to be delivered to
them within 2 hours or next day depending on the location. Amazon has put in

6. place a number of techniques that can arrange and pack your product and send it to
your home.
Amazon has deployed a number of drones, robots, and other logistics technologies
to help the goods reach your house faster. There are also many other delivery
robots through which they are delivering the goods to their customer.
Third-party procurement and Self-manufacturing
Amazon is not just a retail e-commerce website now where it sells products from
3rd party. It is a company that ultimately focuses on customer satisfaction. In due
course of time, Amazon has looked into possible ways of decreasing the cost of
products.
With time, Amazon started manufacturing its own products like Earphones, iPhone
chargers and many other things. These goods were much cheaper than the 3rd
party manufacturers.
The product quality is also much better as the quality control is done by Amazon
themselves. This leads to a lot of simplifications and decreases a lot of
complications on the part of Amazon.
Cost-Effective Supply chain
Amazon has kept the cost of its supply chain very low. Due to its huge economies
of scale, it was able to keep its cost very low. The per-unit supply is very cost
effective. Amazon has several warehouses of its own and it has automated to a
great extent. This is why they have a lot less operation cost than other companies.
High-level Automation
From its warehouses to delivery, Amazon has deployed a lot of robots to automate
it. There are robots that would move and arrange the goods in the warehouse and
also packaging the goods. For the delivery, Amazon has deployed drones, delivery
robots, to deliver the product to the customer's house. This decreases human
involvement and thus decreases the cost of operation.
Outsourcing Inventory Management and Insourcing
Logistics
Amazon outsources its inventory management to third parties wherever they see
it's feasible. Outsourcing helps them reduce costs and reduce the unnecessary
expansion of the supply chain.

7. The third party stores the goods in their local storage and it is not stored in an
Amazon warehouse. These third-party warehouses are generally located at special
places and are supplied with those goods which are in high demand in that area.
Push-Pull Strategy for Supply Chain Success
Amazon implements a push-pull strategy in its warehouse management. The
warehouses owned by Amazon are located in more strategic locations. While the
Warehouses belonging to the third party are located at other places. So in the case
of Amazon's warehouse, it implements a push strategy and in the case of a third-
party warehouse, it implements a pull strategy.
HOW CAN SMALL BUSINESSES COMPETE WITH
AMAZON?
Amazon might feel like a behemoth that cannot be trifled with, but small businesses do have unique advantages
over the retail giant. For example, they can provide a personable,unmatched customer experience that cannot be
achieved at such a large scale. To compete against the convenience of Amazon, smaller businesses should
instead be focusing on providing a reliable service that consumers cannot get elsewhere that will keep them
coming back as regular customers time and time again. Here are some things you can do to make sure your
business stays competitive:
 Make customer service your priority
The way you treat your customers needs to be the most crucial thing in yourbusiness.Positive e-commerce
experiences will create a buzz about your brand and bring customers back again, as well as encourage them to
spread the word about their experience with your business.The ultimate care and service is what will bring
people running to your business.Free samples in packages, vouchers for their next delivery and a personalised
thank you note are all great little touches that will elevate your customer service to the next level.
 Prepare for the unexpected
An unexpected downturn in sales or expenses can make or break an unprepared small business.Make sure you
have some kind of safety net to catch you during these difficult times, whether it’s with disciplined savings or a
business credit card, have some kind of reserve in place to carry you through slumps so you don’t end up in debt
that you can’t get out of.
 Grow your brand
Use social media and review sites to grow your brand and get your name out there. With online scams
everywhere, most consumers will look for reviews before purchasing through an unknown company. So use this
to youradvantage and ensure you’re getting the best possible reviews to encourage others to buy – follow-up
emails from purchases can be a great tool to get more reviews from previous customers.
 Put emphasis on “shop local”
Consumers are caring more and more about where their products come from and how to reduce their carbon
footprint. Jump on this trend and emphasise the locality of yourbusiness.Get out in your community, sponsor

8. local events and let people know all about your local products and how their purchases will be boosting the local
economy.
 Personalisation and customisation
You need to understand yourcustomers and let them know that you care. Stock emails won’t get people’s
attention,so make sure they are directed to people by name and offer them exclusive offers and products based
on their purchasing habits. Sending offers that resonate directly with yourcustomers will help to push your
brand as one that genuinely cares and understands its customer base.
 Optimise your supply chain
Finally, make sure you optimise your supply chain so it is running as effectively and efficiently as possible so
you can get those orders out on time and not leave anyone disappointed.This can be done in a number of ways,
including completely overhauling outdated processes such as the use of paperspreadsheets.Barcode
labels and asset tracking software can be a great asset to yourwarehouse, allowing you to keep track of your
stockin real-time and provide you with comprehensive data about the inner workings of your supply chain, so
you can make informed, data-driven decisions.At GSM Barcoding, we can provide you with a complete stock
control software systemto help take your small business to the next level. Contact us today for more
information.