Introduction
Amazon is a Canadian e-commerce corporation, which occupies a large percentage of the U.S. domestic market for online trade. According to Mark and Johnson (2018), its share of the U.S. retail sales is 43%. The organization’s tremendous success in business operations enabled many researchers to study and analyze this company to apprehend its managerial wisdom. In this paper, the remarkable market performance of Amazon will be explained from the standpoint of supply chain management using the materials kindly provided in the case study by Mark and Johnson.
Continuous Modernization and Adaptation
One of the reasons why Amazon grows to acquire more and more presence in the online retail sector is that it continually invests in technology and scale. As reported by Mark and Johnson (2018), Amazon builds new distribution centers as its network increases in size. Also, the company is aware that its shipping and delivery partners may not always maintain the same level of development, which led the owners to opt for creating their logistics. Thus, after suffering sufficient financial losses due to the U.S. Postal Services failing to deliver goods to customers on New Year’s Eve, Amazon decided to create an internal logistics network.
Amazon optimizes the use of resources through automation, which allows for increased efficiency and, therefore, competitiveness. As such, the company transitioned to electronic document flow, which boosted communication effectiveness and procurement procedures in general (Mark & Johnson, 2018). The company also simplified the process of gathering necessary information from its suppliers by introducing Vendor Central, a software that allows for faster and more organized reception of shipment details and invoices.
Amazon investments into automation also included optimization of warehousing operations through the use of robotics (Mark & Johnson, 2018). Thus, Amazon storage practices include autonomous loading, movement, control, object recognition, and other AI-enhanced services. The company avidly implements and tests new technological developments such as drones for delivery purposes.
Cost Reduction and Economy
While Amazon invests in the growth and development of new facilities to cover new areas and increases the effectiveness of its operations, it also seeks ways to decrease their cost. As such, the organization tried using individual driver services similar to Uber to deliver small packages within densely populated urban areas. By arranging an outbound sortation and using low-cost carriers, Amazon manages to maintain the delivery costs to a minimum, which also allows the company to stay competitive. The organization also utilizes the full potential of its status as the largest online retailer to negotiate better pricing schemes with its suppliers and transportation firms. The aforementioned decision to transition toward internal logistics is also projected to decrease Amazon’s shipping costs.
Conclusion
The case study of Amazon’s supply chain revealed a variety of nuances that help the firm to aspire to the 43% market share of domestic online retailing. Among the factors that influenced the success of Amazon are its orientation towards cost reduction, a technological boost of operations productivity, and strategic decision-making in terms of logistics. The company invests heavily in expanding, modernizing, and internalizing its operations to maintain control and efficacy of all business affairs concerning supply chains.
It continually seeks ways to reduce costs and tries new approaches. Finally, it realizes and utilizes its status privileges and bargaining power. Overall, these actions led Amazon corporation to be the largest and one of the most successful market players in online retailing.
Reference
Mark, K., & Johnson, F. (2018). Amazon.com: Supply chain management. W18451. Ontario, Canada: Ivey Publishing.