Analysis of Amazon Australia's Logistics and Supply Chain Operations

This report provides an in-depth analysis of the logistics and supply chain challenges faced by Amazon in Australia. It explores key issues such as employee satisfaction, recruitment difficulties due to a smaller population base, and uncompetitive wages affecting the efficiency of operations. The report also examines the impact of limited warehouse centers, the constraints of the Amazon Prime Day offers, and the growth potential for e-commerce in Australia. It discusses the importance of factors like manpower, employee motivation, and warehouse network expansion for successful delivery services. The study provides a comprehensive overview of Amazon's current operational challenges and offers recommendations for improvement, covering areas from employee relations to strategic warehouse development. The report focuses on providing insights into how Amazon can improve its operational excellence in the country.

Running head: LOGISTICS AND SUPPLY
Order Delivery in the context of Amazon Australia
Name of the student:
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Executive summary
Logistics and supply chain management is an integral part of operations. Similarly, logistics and
supply chain operations is also an essential part of e-commerce retail operations. However, the
logistics and supply chain operations like other parts of operations face challenges for various
reasons. This study also highlights the logistics and supply chain operations issues currently
faced by Amazon in Australia. On a broader aspect, Amazon faces issues like increasing
employee dissatisfaction, reduced people resources due to small populations in Australia,
affected customer service standard, unattractive Amazon Prime Day offers, less growth
opportunity in Australia, ineffective reverse logistics system and so forth.

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Table of Contents
1. Introduction..................................................................................................................................3
2. Body.............................................................................................................................................3
2.1 Introducing section................................................................................................................3
2.2 Discussion on the "top 10" key issues/ principles in Logistics and Supply Chain
Management concerning "Order Delivery in the context of Amazon Australia"........................4
2.3 Findings...............................................................................................................................11
3. Conclusion and Recommendations............................................................................................12
Conclusion:................................................................................................................................12
Recommendations:....................................................................................................................13
References......................................................................................................................................14

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1. Introduction
Logistics is an essential part of the entire supply chain operations. It fulfills the various
needs such as receiving and delivering the shipping received from suppliers to a dedicated
warehouse, delivering orders to customers in case of an e-commerce company and so forth. Like
for other retailers’, logistics, as well as supply chain operations, play a critical role in delivering
increased business expectations for an e-commerce retail brand. E-Commerce retailers are
hugely reliant over quick and robust logistics and supply chain operations. This study is also
related to a globally popular and leading e-commerce retailer “Amazon” (Amazon.com 2019).
Specifically, the study deals with supply chain issues and principles in the context of Amazon in
Australia. This topic is a point of interest for a fact that Australia is quite different from other
developed nations like the United States of America. It is different from the U.S. concerning
geographical set up of major cities and towns and the population of people in respective cities
and towns (Paris 2017). Such factors will only ask for more and more development of warehouse
networks to be able to meet customers’ expectations of order delivery (Hugos 2018). Therefore,
the main purpose of this task is to study the supply chain challenges or principles in the context
of Amazon business operations in Australia. The purpose should be served expectedly by finding
a few more challenges apart from those mentioned in this section as currently faced by Amazon.
2. Body
2.1 Introducing the section
This section covers or identifies the top ten logistics and supply chain management issues
or principles faced by Amazon in Australia. This has been just a few years since Amazon had

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started to operate in the country. Amazon has started its delivery service since 2017
(Businessinsider.com.au 2019). However, within just a few years of its operations in Australia
Amazon has come across a few issues influencing the effectiveness of its logistics and supply
chain operations. Here in this section, these issues will be discussed with a purpose to generate a
range of recommendation for the company for its much-improved performance in Australia than
compared to its current operations excellence in the country.
2.2 Discussion on the "top 10" key issues/ principles in Logistics and Supply Chain
Management concerning "Order Delivery in the context of Amazon Australia"
Before discussing the key issues faced by Amazon in Australia it is primarily important
to identify the factors, which contribute to the success of delivery service. The success of the
delivery services in the context of an e-commerce company broadly depends on the following
factors (Yu et al. 2016):
 Manpower
Employed people take care of order delivery services from tracking the orders to delivering it to
concerned customers. It is important to have an adequate number of people to take care of the
various functional needs of the order delivery service. Gradually, the needs will increase with
growing numbers of orders on a daily, weekly, monthly or yearly basis (Yu et al. 2016).
‘Manpower’ makes up a significant portion of the entire logistics and supply chain management.
 Motivation

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It is important to keep workers motivated under different circumstances to avoid employee
dissatisfaction. Indeed, workers usually have to face increased work pressure in delivery service
when pushed to work hard over their scheduled working hours. It affects the motivation to work
and so the customer service efficiency of the delivery of boys or drivers (Hanaysha and Majid
2018).
 Warehouse Network Expansion
For faster delivery of orders, it is important to have a good expansion of warehouse centres. With
good numbers of warehouse centres, an e-commerce retail brand will be able to deliver orders
faster than most other companies will. Moreover, the customer satisfaction rate for the employer
will be higher as well. However, it is not easy to build up an adequate number of warehouse
centres due to various external barriers such as the local country's investment policy for foreign
investors (Young, Hood and Hamill 2017).
On looking closely to the performance of Amazon until now in Australia, it becomes
evident that the leading e-commerce giant faces quite a few issues affecting the efficiency of its
logistics and supply chain operations. These issues are listed below:
1. Employee Satisfaction
The
employee satisfaction rate for Amazon has always been in question. There are pieces of
evidence, which show that Amazon’s drivers are not fully satisfied with the working conditions.
According to various reports, Amazon’s delivery drivers are asked to work hard for an
uncompetitive pay (Bbc.com 2019). According to a few officials, Amazon claims to provide one
hour of a break to their drivers in their 08:30 to 09:00 long hours shift (Bbc.com 2019). Amazon
will need more and more fresh people in Australia with its growing business in the country.

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Reportedly, Amazon is set to increase the number of its warehouse centres in Australia.
Currently, it has its only warehouse centre in Melbourne seeking to fulfill the demand of a huge
population. This will as per a few reports will be followed by a new warehouse facility in Sydney
and Perth (Bbc.com 2019). Hence, they will need more people to take care of the operations at
warehouse centres and to fulfill the delivery service. Moreover, they should also be able to retain
more people to avoid wasting the controllable expenses. All this will happen when they could
realise the growing dissatisfaction among employees and act upon it to ensure they offer much-
improved working conditions, good pay and other employment benefits (Raziq and Maulabakhsh
2015).
2. Recruitment of People
As stated above, Amazon will need more people with their growing business in Australia.
However, it is not as easy to get new people in Australia as in some other developed nations like
the United States of America. Unlike the United States of America Australia has a comparatively
lower population of people across its different states. This means Amazon will have to rely on
reduced people resources. Adding to this the cost of living is very high in Australia (Saberi et
al. 2017). This indicates the urgency to be good at meeting the standard minimum wage.
Moreover, there could be competition for pay benefits between Amazon and other online retail
brands in Australia such as Kogan.com (Kogan.com 2019). All these indicate that Amazon
should avoid repeating the average pay to drivers.
3. Uncompetitive Employee Wage
People are an integral and important part of the entire supply chain operations. Therefore, it is
important to have skilled people as well as to maintain good employee retention rate to reduce

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and to keep in control the entire operational cost. Notably, wage distributed among people makes
up a larger portion of the entire operational cost (Gan, Hernandez and Ma 2016). It is, therefore,
important to offer a competitive wage to people to avoid probable employee dissatisfaction and
increasing employee turnover. However, on the other hand, Amazon has been into criticism for
offering low wages to workers. Amazon is into a situation where it faces the
biggest challenge
that is to find people willing to perform despite receiving low wages. Indeed, this will be the
thing to watch for like whether Amazon can find people willing to work for $15 for an hour
(Ttnews.com 2019). The home security footage clearly shows delivery people frequently
throwing and even punting orders or packages towards the customers’ homes (Ttnews.com
2019).
4. Customer Service
Customer service can be said the heart of any business irrespective of the size of the business.
Likewise, customer service is of huge significance for an e-commerce retail brand like Amazon.
For being able to deliver excellent customer service, few things need \ to be ensured. These are
people, process and partners. In regards to people, Amazon must ensure they have skilled people
taking care of various operations activities. An improved process will require the utilisation of
appropriate and emerging technologies to deliver the best service experience to customers. All
these will be less effective in case Amazon does not have strategic partners working together
(Plouffe et al. 2016). Amazon has been excellently well in identifying and working with strategic
partners. It has its ‘Partners’ based vastly in the United States of America, the United Kingdom
and Japan. These suppliers are Applied Optoelectronics in Texas (United States), Wellnet
Corporation in Tokyo (Japan), TrueBlue in Tacoma, Washington (United States), Nautilus in
Vancouver, Washington (United States), and GoPro in San Mateo, California (United States)

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(Smith, Rupp and Offodile 2017). The ‘Process’ has constantly been under challenge due to
growing expenses on shipping. Shipping consistently outplaces online sales growth (Ttnews.com
2019). Amazon should find cheaper ways of order delivery to ensure sustainable business
growth. Retaining ‘People’ has been one of the biggest challenges for Amazon. It is challenging
to attract people to work for $15 an hour (Ttnews.com 2019).
5. Limited Warehouse Centres
As of now, Amazon has just one
warehouse facility in Australia based in Melbourne. This will
soon be followed by more other facilities in Sydney and Perth (Businessinsider.com.au 2019).
However, even with these warehouses facilities, things will not be going to be easier for
Amazon. It is due to the geographical structure of Australia and its population as well. Australian
states are distantly placed as compared to the United States. Moreover, the area density for
Australia is also higher than in the United States. This means Amazon will have to rely on
expensive transport routes such as the air routes. This is likely to add more problems to the
shipping cost, which is already on a very higher side (Gan, Hernandez and Ma 2016). To reduce
the increasing shipping cost and widen the profit margin Amazon will need to invest in building
more warehouse facilities as quickly as possible.
6. Amazon Prime Day
“
Amazon Prime Day” is a globally held festive event by the company in which consumers get
an unlimited one-day delivery option on Prime retail items. This offer applies only to consumers
who have a Prime membership. Prime members in most countries like in the United States get
two-day delivery option along with same delivery or even within a few hours (Amazon.com
2019). Unlike in most other parts of world Amazon is not offering similar benefits to Australian

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consumers. Prime members in Australia get only a two-day delivery option. Besides, Prime
members will be able to access free video streaming service Prime Video, ebook service Prime
Reading and live video game streaming service Twitch Prime (Smartcompany.com.au 2019).
The local shoppers will be at a disadvantage considering the benefits delivered to Prime
members in most other parts of the world. Consumers in other parts of the world like in the
United States get free same or next day delivery option. In fact, in some major cities, Prime
members even get orders delivered within just two hours (Smartcompany.com.au 2019).
7. E-commerce Growth in Australia
Amazon desperately needs to open new warehouse facilities in major parts of Australia to be
able to reduce the increasing shipping cost. However, doing investments in new facilities does
not appear a feasible approach considering the growth of e-commerce sales in Australia.
According to a new figure published by IBISWorld, the
e-commerce sales make up just 7% of
the entire Australian retail market, which is far much lower to 12% for the United States
(Money.cnn.com 2019). This suggests that Amazon might not be quicker in terms of opening
new warehouse facilities rather be limited just with facilities in Melbourne, and in Perth and
Sydney to follow. By limiting the investments in new facilities, Amazon will keep creating
troubles for its business from its increasing shipping cost in Australia (Kim, Dekker and Heij
2017).
8. Competitors
Few reports suggest that subscription fees for Prime could help Amazon in offsetting the
shipping losses incurred by the brand. This means Amazon could become more competitive with
passing times in Australia. However, this is not the actual picture. Indeed, the unhealthy growth

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of the e-commerce sector in Australia could be a point of concern for Amazon. Notably, the only
biggest standalone online retailer of Australia,
Kogan.com had its shares down by four percent
in recent times (Cnbc.com 2019). To emerge out the biggest e-commerce company in Australia
and to gain significant shares of the entire Australian retail industry sales, Amazon will have to
fix its delivery efficiency, which is only average considering its efficiency in other parts of the
world (Alyoubi 2015). According to a few shoppers of Amazon in remote Outback settlements,
the delivery of orders is already slower than committed by the company’s website (Cnbc.com
2019). For faster delivery of orders and for capitalising the anticipation of consumers from
Amazon, the company will need to do healthy investments in setting more and more warehouse
facility. For this to happen Amazon should have ample growth opportunities in Australia, which
is already far much lower as compared to the United States (Money.cnn.com 2019).
9. Geographical Impact of Australia on the Business
According to a few reports, Amazon faces similar issues in Australia as it faced while being
operative in Canada. Australia like Canada and unlike the United States of America has long
geographic distances. In addition to this, Australia has a very low population (Seok, Reed and
Moon 2017). Amazon will need to deploy extensive logistics operations and cover a huge area
before reaching to customers. Notably, Australia does not have a very productive and cost-saving
inland transport system as compared to the United States of America, the United Kingdom and
so forth (Gusah, Cameron-Rogers and Thompson 2019). This means Amazon will have to rely
more on air transport to reach to customers in the different states in Australia. Due to being
forced to use air transport in most cases, Amazon would perhaps be at a disadvantage with its
shipping service (Ding, Huo and Campos 2017). However, this is not the case with its business
in the United States of America and other developed nations. The “Amazon Prime Day” could be

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the solution against the increasing shipping operations cost; however, it faces stiff competition
from established Australian retailers. Australian retailers such as JB Hi-Fi, David Jones, and
supermarket brands like Coles and Woolworths are trialing for next or even same-day delivery
(Smartcompany.com.au 2019). Considering this, it becomes evident that Amazon two-day
delivery scheme is not going to disrupt the Australian retail market. Amazon can go for buying
major Australian supermarkets such as Coles to repeat the success it had in the United States
with the purchase of Whole Foods. Amazon used Whole Foods as the small fulfilment centres to
improve its efficiency in delivery (Forbes.com 2019). However, it is still questionable whether
Amazon will be able to do it the same in Australia as well.
10. Reverse Logistics
Reverse logistics is going to be a pain as well. An efficient reverse logistics system requires a
smartly designed reverse logistics system in practice. However, Amazon may struggle for a
significant while to design and practice an efficient reverse logistics system. This is due to
various factors. These factors are small populations in Australia, larger states placed distantly
from each other and less effective inland transport system in the country (Agrawal, Singh and
Murtaza 2015). Due to the geographical structure of the country, the reverse logistics system
could be challenged for delayed communication between Amazon and its retail partners. All
these will add additional cost to the reverse logistics system of Amazon (Zielińska et al. 2016).
2.3 Findings
The discussion section suggests the list of challenges currently faced by Amazon in
Australia. These are (Gregory, Ngo and Karavdic 2017):