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Amazon Fulfillment Tour
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Amazon Fulfillment Tour
The video I watched is the Amazon fulfillment tour. This company is a multinational tech
company that deals with artificial intelligence, digital streaming, cloud computing, and ecommerce. The company is amongst the most influential culturally and economically globally.
Amazon is also amongst the most valuable brands in the international arena. The history of
Amazon dates back to 1994, when Jeff Bezos founded the company in Bellevue (Guevara, 2020).
Washington. It started as an online marketplace for books. Currently, the company has expanded
to incorporate a multitude of product categories. Its subsidiaries include Amazon Lab126
(computer hardware R&D), Kuiper Systems (satellite Internet), Zoox (autonomous vehicles), and
Amazon Web Services (cloud computing). Others are Whole Foods Market, IMDb, Twitch, and
Ring. The video profiles various products that the company deals with. These products range
from toys, electronics, housewares, movies, music, jewelry, sexual items, groceries, beauty
products, baby products, apparel, software, and books. The company either sells these products
directly to the customers. It also acts as the link or middle man between wholesalers, retailers
and consumers.
Competitive Strategy
The company uses cost leadership and customer centrality as its competitive business
strategy ("Amazon Business Strategy: cost leadership & customer centricity - ResearchMethodology," 2022). this strategy is taken to the extreme where convenience, price, and range
are at the core. The company operates with razor thin profit margin, and its success can be
attributed to constant business diversification and economies of scale. Jeff Bezos, the first CEO
and founder of Amazon, focuses on things that do not change as business strategy. He reasoned
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that customers always go for fast delivery and low prices. The company capitalizes on exceeding
the expectations of its customers on these two points. This element has remained Amazon's core
business strategy. Online retail, technology, and innovation are the behemoths in business
strategy. Besides, the company's business strategy is guided by four principles: long-term
thinking, commitment to operational excellence, passion for invention, and customer obsession.
This competitive strategy adds a lot of value to the company. The current status of the company
as one of the most valued brands globally and the vast profit margins can be associated with the
competitive strategy. The large economies of scale and high brand value allow Amazon to
remain at the top of the competition.
Logistic Service Providers
Logistics services providers play a critical role in companies. The role is particularly
critical for the multinationals like Amazon that have addressed the needs of customers globally.
Their logistics service provider is UPS ("Amazon is delivering half its packages as it becomes a
serious rival to FedEx and UPS," 2022). However, they are currently developing a network of
their delivery. This logistical network will run under the Amazon Flex platform, a type of ondemand contract network similar to DoorDash and Uber companies. The company has been
steadily improving on the logistical issues and programs over the last ten years. Currently, it
delivers more than fifty percent of all its packages in the United States. They operate their own
cargo and freighters. This means that Amazon is accelerating the push for a self-owned logistics
chain. When successful, the company can end its relationship with UPS and FedEx. The
company is set to pass UPS and FedEx in the United States package volume at this rate.
Currently, Amazon delivers two and a half billion packages annually. UPS is delivering 4.7
billion while FedEx ide doing three billion. Amazon has been able to build more capacity in its
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delivery courtesy of factors such as the one-day Prime shipping initiative that started earlier in
2019. The strategy promises to add more products and customers as time goes by.
Inventory and Warehousing
The video mentions inventory and warehousing, and I have learned so much courtesy of
its elaboration. I have learned that Amazon uses Amazon inventory management systems
software to help customers keep track of their orders, sales, deliveries, and inventory levels. This
software helps synchronize inventories, mitigate fees and reduce the carrying cost of goods. This
helps the customers have less hassle and maintain a more accurate and better balance between
too little and t much stock. Amazon also uses warehouse management systems. The inventory
management and warehouse management systems facilitate warehouse processing, including
inventory storage, packaging, sorting, item picking, and inbound and outbound shipment.
Mode of Transport
The company uses Boeing 767 aircraft, more than five thousand containers, and
Mercedes-Benz printer vans (Ruthie, 2022). Small box trucks are also used in transporting fresh
orders. The company is also considering using drones to deliver raw materials from suppliers and
finished goods to customers. In summary, Amazon uses water, air, and land transport to move
raw materials from suppliers and finished goods to customers. Being a multinational company, it
is easy to understand why Amazon requires the three modes of transport. These things play a
critical role in shipping. Nature of goods being transported, cost of transportation, and urgency of
things under transport.
Suppliers
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Anybody can be a supplier to Amazon. Manufacturers, sellers, individuals, and
businesses sell their inventory to Amazon at wholesale rates. They also offer professional and
individual selling plans for their suppliers. The suppliers sign up for a plan and can use the
business email address to create accounts. The vast nature of Amazon Company necessitates a
wide pool of customers and suppliers. The suppliers are important for raw materials used in
producing goods and services. They also sell finished goods to the company and, in turn, sell
them to other customers at a profit.
Outsourcing and Procuring
Amazon uses inventory management to outsource. It does not use regular warehouses to
store infrequently ordered products. More than half of sales are made by third-party sellers
whose work is to restock the products. It uses this strategy to procure and outsource toys,
electronics, housewares, movies, music, jewelry, sexual items, groceries, beauty products, baby
products, apparel, software, and books.
Ethical and Environmental Responsibility
Amazon is very critical of ethical and environmental responsibility. They have a goal to
attain net-zero carbon by 2040. They are focusing on the use of green energy to minimize
environmental pollution. They also contribute to social welfare via corporate social
responsibility.
Interesting Factors
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It was interesting to learn that Amazon sells almost anything online and that the current
massive company started in a garage. A noble idea from Jeff Bezos revolutionized the whole ecommerce business and created employment for millions of people globally.
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References
Guevara, N., 2022. Bizjournals.com.
https://www.bizjournals.com/seattle/news/2020/11/17/skyline-shaper-johnschoettler.html.
Research-Methodology. 2022. Amazon Business Strategy: cost leadership & customer centricity
- Research-Methodology. https://research-methodology.net/amazon-business-strategybenefiting-cost-leadership-diversification/#_ftn1.
Ruthie, 2022. Looking at Why Amazon Is Bringing Logistics In-House - Supply Chain 24/7.
https://www.supplychain247.com/article/taking_a_look_at_why_amazon_is_bringing_lo
gistics_in_house#:~:text=Amazon's%20current%20transportation%20fleet%20consists,s
printer%20vans%20(leased%20over%20time).
The Verge. 2022. Amazon is delivering half its packages as it becomes a serious rival to FedEx
and UPS. https://www.theverge.com/2019/12/13/21020938/amazon-logistics-prime-airfedex-ups-package-delivery-more-than-50-percent.