Amazon supply chain was different from that experienced by other traditional brick and mortar retailers by its ability to control the Amazon control centers. In the operation of its supply chain, Amazon managed the process of its chain through the sortation centers where each center handled a particular commodity in the market. For instance, the new food distribution centers increased access for the business to reach the market. The outbound sortation centers in a traditional order fulfillment process where the packaged products went to the shipper for sorting. However, Amazon received sorted commodities before forwarding them to the shippers.
Amazon’s management of its supply chain contributed to an increase in the coverage and area and control of demand between suppliers and in the market. This information indicated that there is a match between the commodities and supplied to customers. For instance, as the costs of managing a particular chain increased, the company has an opportunity for changing the price by improving the services they offer to customers and increase rates without losing customers. For instance, when Amazon realized that it experienced an increase in costs of maintaining the supply chain and expanding services, they increased the rates and informed customers on the changes made by the organization. Possessing and managing supply chain channels also increases the opportunity of a company to take full control of the product from the customers to the end customer.
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Amazon has an opening for continuing with its dominance in the e-commerce market as there is an increased level of investment in technological development and innovation to create new services in the company. For instance, Amazon has been the leading retailer and digital content in the retail market. However, the company continues to exploit new areas in the market, resulting in an increment in the market, thus increasing its presence in e-commerce. For instance, Amazon announced in February in the year 2018 that it was to enter the consumer shipping market. This service by Amazon increased an opportunity for the company to continue thriving in online business.
What are the challenges Amazon faces, and what are the implications for its supply chain?
Amazon continues experiences challenges associated with operational costs such as the difference between what the company charges its customers and that charged by the third parties. This information indicates that Amazon stands the risk for experiencing a decline in its profit level because it increases revenue from its customers which may translate to a loss when compared to the actual costs incurred by delivering those services. For example, Amazon experienced costs of $16.167 billion, and the revenues from shipping were $8.976 billion (Mark, 2019). In effect, the company suffered a loss. These lose indicates that Amazon is likely to reduce its competitive advantage because of increased costs of operation.
Amazon supply chain can improve its performance in the market and increase competitive advantage by increasing innovations to minimize the costs of operation as well as averaging the prices for customers and a third party. The price difference between the estimates shows that there is a mismatch between the costs incurred in operation. Low-profit margin increases the vulnerability of the company to experience competition from other investors such as eBay and Wal-Mart.
Investing in Amazon stock would be a better option for covering a broad market across the globe. This information indicates that Amazon is the leading market in the company that results in increased sales volume. Amazon has specialized channels for handling every category of goods and services to the intended customer. The prices for Amazon are also affordable making it easy to enjoy full services for the supply chain.
References
Mark, K. (2019). Amazon Supply Chain. Candelario , 30.
