Changing Supply Chain Management of Amazon

This report analyzes the changing supply chain management of Amazon as it becomes an online retailer and attains a competitive edge in the global market. It explores the growth of Amazon as an online retailer, the effectiveness of its e-commerce platform in replacing in-person shopping experience, and the long-term implications of its presence in the Australian retail industry.

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Changing Supply Chain Management of Amazon
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Executive Summary
Amazon began its business operations as an online book retailer. With the growing years, the
company has attained growth in its supply chain management as an “everything store”. The
objective of the report was to analyse the ways in which the supply chain management of
Amazon is changing over years through becoming an online retailer and attaining competitive
edge in the increased globalization of world trade. It has been revealed that with an increased
volume of offerings that is dealt by Amazon, it can be observed that the e-commerce site is
dealing with high volume situations that facilitate the company to ensure low-cost production.
Moreover, Amazon is observed to implement long term implications in the Australian retail
industry for the reason that interactive product visualization technology of Amazon is anticipated
to bring the tangible in-store experience of Australia.

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Table of Contents
1. Introduction..................................................................................................................................3
2. Amazon’s Growth as Online Retailer..........................................................................................3
3. Amazon’s Operation Management based on Increased Globalization of World Trade..............4
4. Effectiveness of Amazon’s E-commerce in Replacing In-person Shopping Experience............7
5. Long Term Implications of Increased Presence of Amazon within Australian Retail Industry..9
6. Conclusion.................................................................................................................................10
References......................................................................................................................................11

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1. Introduction
Amazon is positioned as one of the successful e-commerce organization that offers a
successful marketplace for the sellers, consumers along with content creators. The intensity of
Amazon Company’s supply chain management innovations has been highly effective with its
incredible rate of change that makes it difficult for its competitors to remain in tough rivalry with
the company (Dennis, Cheong and Sun 2017). The objective of the report is to analyse the ways
in which the supply chain management of Amazon is changing over years through becoming an
online retailer and attaining competitive edge in the increased globalization of world trade.
Moreover, it will also analyse the long term implications of increased presence of Amazon
within the Australian retail industry.
2. Amazon’s Growth as Online Retailer
After Amazon established its business in the year 2004, its yearly revenue was $ 7 billion
that reached to $ 136 billion the year 2017. Such tremendous growth has positioned it s the
fastest growth e-commerce company that attained $ 100 billion as sales revenue. From Amazon
Company’s establishment the company has indicated growth of over 20% each year that is
anticipated to be $ 1 trillion yearly by the end 2027 (Diehl and Bishop 2017). One of the major
reasons that resulted in drastic transformation of Amazon in Australian retail industry form being
a simple bookseller to highly dominate force within the industry by means of its highly
innovative and efficient supply chain. The e-commerce organizations; constant effort in offering
products to consumers in a rapid manner are resulting in increased pressure for other established
online retailers within global retail industry along with transforming the operations of supply
chain management. The combination of manufacturing for supporting its retail operations have

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offered Amazon with increased opportunity of revenue growth within the sector (Vendrell-
Herrero et al. 2017).
Amazon began its business operations as an online book retailer. With the growing years,
the company has attained growth in its supply chain management as an “everything store”.
Through developing its supply chain, it is observed to persuade its competitors to invest more
within the automation in supply chain, lessen the overall product delivery time, and increase in
the warehouse numbers along with getting involved in product manufacturing (Garcia Drigo et
al. 2016). Amazon has attained growth over years from being online book seller to most
renowned global “all goods” e-commerce site after its acquisition of “Whole Foods” that is a
bold declaration of its business shift within Bricks and Mortar. Moreover, the company has also
emphasised on the convergence of traditional retail along with e-commerce strategies. Most
importantly, Amazon has implemented exceptional supply chain strategies along with ensuring
continuous technological innovations that has changed the manner in which supply chain
management of this e-commerce site works. Through implementing technological advancements
in its e-commerce business operations such as through implementing drones, robotics along with
other automation vehicles the company is intended to ensure its high business growth and
sustainability within Australian retail industry (Heizer, Render and Munson 2016).
3. Amazon’s Operation Management based on Increased Globalization of World Trade
Certain successful aspects of Amazon’s operation management has are observed to be
relied on increased globalization of world trade. Considering the same, it has been gathered that
patience, increased investment along with constant innovation has facilitated the company in
attaining competitive edge. Effective operations management of Amazon has facilitated in

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ensuring 85% of the world’s products to be easily assessable on Amazon (Phillips-Connolly and
Connolly 2017). Amazon operations have developed it as a retail giant through producing variety
of products including batteries, backpacks, Bluetooth speakers, phone chargers along with
grocery stores. In fact, in the near future the company might include more product categories in
future within the manufacturing products sector (Merlino and Sproģe 2017).
Amazon has attained tremendous success in the global retail industry because of its
modified quick and efficient supply chain management. The operations of Amazon include
sophisticated and advanced information technology, an extensive warehouses network, multi-tier
inventory network along with exceptional transportation. This makes the supply chain of the e-
commerce company to ne most efficient among the major companies involved in global retail
trade The (Balance Small Business. 2019). The operations management advancements resulting
in increased globalization of word trade in retail industry are indicated below:
 Outsourcing inventory management along with in sourcing logistics: The inventory
system of Amazon is completely focussed on it inventory management. Particularly the
products those are not purchase regularly are not stored within regular Amazon
warehouses (Sodhi and Tang 2017). Amazon has realised that relying on the third-party
logistics can facilitate in lengthening the product delivery time. This is the reason for
which Amazon considers maximum use of its own delivery vehicles for ensuring same-
day delivery or for one-hour delivery options. The e-commerce site has attained
competitive advantage on global trade as its operations management ensures same-day
shipping because of increased dependence on its own logistics.
 Delivery options to consumers: In maintaining its supply chain operations highly
efficient in the global retail platform, Amazon has maintained different warehouses for

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distinct types of products along with consumer preferences for delivery options. Certain
common delivery options those are available for the Amazon consumers include prime
consumers delivery, one-day, and first class along with free super saver delivery. The
company’s regular effort to make product delivery rapid making it a logistics giant along
with leader in global retail industry.
 Push/ pull strategy for success of supply chain: Own warehouses of Amazon are
strategically placed that is focussed on major metropolitan cities and city centres. For this
reason, the company employs push strategy for its offerings in stores within its
warehouses. On the other hand, it also employs a pure pull strategy while it sells its
offerings to the third party sellers (Yu et al. 2016).
 Automation: In implementing the automation technology within the supply chain
operational process of Amazon, it has increased its army of robots within its global
warehouses. The robots of Amazon can puck and pack without requiring any human
assistance that facilitates the company in accomplishing warehouse activities in a rapid
manner. Such technology is attaining success domestically and in global scale for the
large facilities as well as smaller islands of automation within the existing facilities. For
instance, Autostore serves as a robotic automation provider used by Amazon in making
it’s consume delivery process highly effective (Sodhi and Tang 2017).
 Zones and Classes: In attaining competitive advantages within global retail trade
environment, Amazon has made fast delivery promises through positioning itself as the
most efficient e-commerce site among new warehouse in proximity to the local urban
markets. It operates through the Omni-channel distribution network that has an operating
network of mini-warehouses. The size, location along with the number of warehouses is

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vita factors in ensuring success of Amazon’s supply chain for global trade. For ensuring
supply chain efficiency globally, Amazon has segmented its warehouse in five storage
areas that includes library prime stores books and magazines. In addition, the pallet prime
storage stores the full case products which are high in demand. The case flow prime
storage departments stores high demand products picked in “less-than-case” quantities
(Sodhi and Tang 2017). In attaining supply chain efficient and competing on the global
scale its reverse storage accommodates irregularly shaped along with low demand
openings and its random storage area stores modern demand and smaller items. In
segmentation of its warehouses makes service delivery convenient for Amazon.
4. Effectiveness of Amazon’s E-commerce in Replacing In-person Shopping Experience
The marketplace of Amazon Company is focussed on the smaller sellers along with
manufacturers through associating them with a huge base of consumers along with a fulfilment
program. From observing such scenario, it is anticipated that e-commerce can truly replace the
in-person shopping experience for Amazon consumers. The Amazon e-commerce platform effect
is causing ongoing disruption and evolution within the Australian retail markets both for the
online and physical stores that are resulting from increased e-commerce (Kayikci 2019). Such
drastic effect of improved and innovative online supply chain management of the company is
increased ongoing consumer shift to shopping online. Online companies have started using the
pop-up stores in increased the consumer reach in distinct manners that is not possible in virtual
manner. In implementing such strategy, Amazon has implemented pop-up to push its Kindle
Line.

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Amazon’s enhancing e-commerce business is focussed on selling the third party products
it is offering to consumers with manufactured products at lower prices. The consumers are
intended to purchase from the advanced services offered by Amazon on its online platform. The
consumers in the recent global marketplace is considering e-commerce platform to be more
convenient that can increase chances of replacing the in-person shopping experience (Kumar,
Tiffany and Vaidya 2016). In addition, one of the biggest issues face by offline retailers is
observed to face issues of rising costs in rent competition and workforce. However, it is not
convenient for the online retailers like Amazon to replace in-person shopping experience as
several value added in-store features along high shipping costs faced by consumers in online
purchase might increase number of visitors in departmental stores.
Amazon positioned itself as the provider of automatic as well as robotic warehouse
solutions through its Kiva Systems. Such innovative online business operations have facilitated
the company in replacing In-person shopping experience of the consumers. Moreover, e-
commerce is observed to attain increased growth in the global retail industry that is imposing
treat on the in-person shopping experience of the consumers. This is for the reason that, the
consumers prefer to purchase online because of value propositions offered by Amazon for its
consumers in online shopping (Kumar and Vaidya 2016). With an increased volume of offerings
that is dealt by Amazon, it can be observed that the e-commerce site is dealing with high volume
situations that facilitate the company to ensure low-cost production. With increasing its e-
commerce business, the company is able to maintain its supply chain cost low. This is making it
difficult for the traditional store companies to minimise its warehouse costs. However, it can be
stated that technology can serve as an effective tool for enhancing business operations and not
being a replacement for merchandising, consumer service, marketing, partnership with other

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businesses or product design those are business fundamentals and a human activity (Wang et al.
2018).
5. Long Term Implications of Increased Presence of Amazon within Australian Retail
Industry
Certain real long term implications of increased presence of Amazon within the
Australian retail industry are observed from its rapid growth in the Australian retail e-commerce
market. Amazon Australia is deemed to have a drastic impact on the nation’s e-commerce
industry. With its exceptional and highly innovative supply chain management strategies,
Australia is deemed to put several local retailers under drastic pressure and for remaining
competitive, the local e-commerce organizations are required to work towards the best consumer
interests. Amazon is observed to implement long term implications in the Australian retail
industry for the reason that interactive product visualization technology of Amazon is anticipated
to bring the tangible in-store experience of Australia (Jain and Sharma 2017). Moreover, Omni-
channel distribution network is considered to be the expanding within the Australian retail
industry that can affect the offline traditional retailers in the nation. Moreover, the level of online
business integration in Australia will facilitate the company in offering support to small
businesses. Consumer shopping experience in the retail market will enhance as Amazon will
greatly focus on consumer shopping experience though offering them with low priced,
convenient and wide merchandise section in comparison to additional stores (US about Amazon.
2019).

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6. Conclusion
The objective of the report was to analyse the ways in which the supply chain
management of Amazon is changing over years through becoming an online retailer and
attaining competitive edge in the increased globalization of world trade. It was analysed from the
report that Amazon has attained growth over years from being online book seller to most
renowned global “all goods” e-commerce site after its acquisition of “Whole Foods” that is a
bold declaration of its business shift within Bricks and Mortar. It was also revealed that Amazon
is observed to implement long term implications in the Australian retail industry for the reason
that interactive product visualization technology of Amazon is anticipated to bring the tangible
in-store experience of Australia.

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