Amazon unveils fully-managed supply chain service for sellers

Amazon launches end-to-end Supply Chain by Amazon, simplifying operations and boosting sales for sellers by an average of 20%.

Amazon unveils fully-managed supply chain service for sellers
Amazon fully-managed supply chain service

Amazon has introduced a fully-managed, end-to-end Supply Chain by Amazon service for sellers, aiming to revolutionize supply chain management. Announced on September 18, 2024, this new offering builds upon Amazon's vision to provide comprehensive supply chain solutions that streamline operations from manufacturers to customers worldwide.

According to Dharmesh Mehta, Vice President of Worldwide Selling Partner Services at Amazon, the new service is designed to simplify seller operations, reduce costs, and accelerate product delivery. "Supply Chain by Amazon is radically simplifying operations and optimizing inventory placement, unlocking faster delivery speeds that are increasing sales by an average of 20%," Mehta stated in the announcement.

The fully-managed option, available to all U.S. sellers for domestic pickups in October and global pickups by year-end, allows Amazon to automate the movement of products through various supply chain services. Sellers need only provide product details and pickup locations, while Amazon manages the rest, including carrier pickup, inventory consolidation, strategic replenishment, and placement into fulfillment centers nearest to customers.

Key features of the Supply Chain by Amazon service include:

  1. Global Logistics: Amazon moved over 20,000 containers globally in August 2024, facilitating worldwide product movement from manufacturing hubs through customs to destination countries.
  2. Domestic Logistics: Sellers can book transportation at up to 25% lower costs compared to alternatives. The service is available in 19 countries, with U.S. sellers having used it to send 2 billion product units into Amazon's fulfillment network since September 2023.
  3. Amazon Warehousing and Distribution (AWD): This solution offers low-cost warehousing for bulk product storage. Amazon is quadrupling AWD capacity in the U.S. in 2024 to meet growing seller demand.
  4. Multi-Channel Distribution (MCD): A new feature for AWD, MCD allows sellers to distribute products in bulk across various sales channels from a unified inventory pool. This approach has reduced total stock needs by an average of 20% for sellers.
  5. Custom Labeling: MCD now offers custom labeling capabilities, enabling sellers to distribute products to various sales channels, including other marketplace services, wholesalers, distributors, and their own physical stores.

The fully-managed option comes with additional benefits for sellers:

  • A 25% discount on AWD storage fees
  • A 15% reduction in AWD transportation and processing costs
  • Qualification for AWD integrated rates

Steve Neufer, co-founder of Juvo+, an Amazon seller, shared his experience with the new service: "Having Amazon partner with us on our end-to-end supply chain has been a game changer that's great for our business. The speed and reliability of its logistics services has enabled us to keep our products in stock with less working capital while delighting customers with lightning-fast deliveries."

Neufer also noted the impact on sales conversion: "Customers react strongly to being able to get a product same day or next day, and we see our sales conversion roughly double."

Amazon's expansion of its supply chain services comes amid growing competition in the e-commerce sector. By offering comprehensive solutions, Amazon aims to strengthen its relationship with sellers and maintain its position as a leading online marketplace.

The company's focus on supply chain optimization aligns with broader industry trends towards efficiency and speed in order fulfillment. As consumer expectations for rapid delivery continue to rise, services like Supply Chain by Amazon may become increasingly crucial for sellers looking to remain competitive in the e-commerce landscape.

Key facts and figures

  • Amazon moved over 20,000 containers globally in August 2024
  • Sellers have used Amazon's domestic logistics services to send 2 billion product units into the fulfillment network since September 2023
  • Amazon is quadrupling AWD capacity in the U.S. in 2024
  • Multi-Channel Distribution has reduced total stock needs by an average of 20% for sellers
  • The fully-managed Supply Chain by Amazon service is driving an average 20% increase in sales conversion for sellers
  • Sellers receive a 25% discount on AWD storage fees and a 15% reduction in AWD transportation and processing costs with the fully-managed option

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