How to Develop a Supply Chain Strategy Like Amazon

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Amazon has taken the eCommerce industry by storm, becoming the leading online marketplace in the world. And what’s not to love? From fast, affordable shipping to great customer service, consumers can find pretty much anything they need on Amazon.

The company has become one of the fastest growing in history, thanks in large part to its complete restructuring of the supply chain. Amazon customers know their products will arrive on time, with some arriving within just a few hours or less. If anything goes wrong along the way, the customer can easily get the help they need by contacting the company via phone or email. It’s all part of a winning supply chain strategy that’s revolutionized the eCommerce business and heightened customer expectations.

Become the next Amazon and learn how to create and implement a winning supply chain strategy.

Buyer Recommendations and Great Customer Service for Rapid Growth

Amazon has been enjoying a period of rapid growth over the last few years. Amazon marketplace sales totaled $118.57 billion in 2017, up 25.2 percent from $94.67 billion in 2016. The company keeps sending more and more products through the supply chain, meeting the needs of its customers at every turn. Their website currently features 1,761,784 sellers, which means customers can find virtually everything they need.

If you want to create a supply chain like Amazon’s, you need to “wow” your customers with great customer service. Amazon wouldn’t be the company it is today without great customer service, including fast, affordable shipping, 24/7 customer support, seemingly endless variety and product recommendations that encourage customers to add more items to their cart. The better you serve your customers, the faster your supply chain will grow.

Hyper-Local Deliveries

Amazon is known for its Prime service, offering free, two-day shipping to its most loyal customers. The company has also unveiled Amazon Now, which can deliver certain products to consumers in just a few hours or less. And, now Amazon has introduced Counter they’re recent effort to provide a “Buy-Online, Pickup In-Store” (BOPIS) strategy since Amazon doesn’t have many physical locations, and as a way to combat against Walmart and Target, as evidenced by this tweet from Cathy Roberson of Logistics TI:

So, how does this eCommerce behemoth deliver so many products on such a tight turnaround?

Amazon has 75 fulfillment centers across the country. It is now believed that the company has warehouses within 20 miles of half the U.S. population. This allows Amazon to quickly ship products around the country. While you may not need hundreds of thousands of square feet in warehousing space, adding more distribution centers to your supply chain can help you speed up the delivery process, especially in or near urban areas where lots of potential customers tend to reside. 

Instead of managing dozens of warehouses yourself, try investing in shared distribution centers to keep your products closer to your consumers.

Consumer Analytics

Amazon doesn’t wait for its customers to click the “checkout” button before sending out their products. The company uses data analytics to predict their customers’ future buying habits. They send the products their consumers are most likely to buy to local distribution centers so they can be delivered as quickly as possible once the customer decides to make a purchase.

Amazon collects all kinds of data on its users, including their purchase history, what items they tend to view or keep in their shopping cart and what kinds of products tend to be most popular with consumers in a given geographic location.

If you collect these kinds of data on your customers, you’ll be better prepared to meet their needs when they finally decide to make a purchase. Keep your distribution centers stocked with popular products and figure out which products your customers are most likely to buy.

Invest in Automation

If you want to compete with the best of the best when it comes to logistics, you need to invest in automation. These sophisticated machines will make your entire supply chain more efficient. From stocking, picking and package fulfillment, you can get orders out the door as fast as possible. These machines can also work 24/7 without taking a break, so you can maximize efficiency without overworking your employees.

Distribution center automation can be a steep investment for many emerging eCommerce players, but it will reduce your overhead over the long term and help you better meet the needs of your customers so you continue growing at lightning speed.

If you’re just getting started with warehouse automation, look for small ways to automate certain aspects of your business, such as automatic label printers and pickers and stockers. If these new additions serve your business well, you can always add more machines down the line. Don’t forget to regularly maintain this equipment and plan for some scheduled downtime so these machines can be inspected and repaired. Slowly automate certain processes until your warehouses look more and more like Amazon’s.

Keep Your Warehouse Organized

Despite all the upgrades we just mentioned, nothing will prevent you from competing with Amazon like a disorganized warehouse. Your employees can’t do their jobs and get orders out the door if they can’t find what they’re looking for on the shelf.

Keep your warehouse organized with industrial storage bins, stack racks and other storage equipment. Make sure all your items are easily accessible and keep the most popular items close to the loading dock. Use shipping containers that keep your products safe and sound and package each container properly or your customers will take their business elsewhere.

Outsource Your Inventory and Focus on Logistics

If you’re manufacturing and distributing all your own products, certain aspects of your business may suffer as a result. To increase efficiency, consider outsourcing your inventory management using third-party sellers so you can focus on mastering the supply chain. You can pool your resources to invest in automation, more distribution centers and expert customer service. Follow in Amazon’s footsteps to take your business to new heights.

From fast shipping to effective warehouse management, every aspect of your supply chain needs to run like a well-oiled machine. Focus on pleasing your customers and offer them the features they care about most. Use these tips to become the next king of eCommerce.

If you’re looking for logistics solutions to compete with Amazon and master an omnimodal, omnichannel shipping environment, inquire about Cerasis transportation management solutions by contacting us today.

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