Introduction
Amazon facilitates individual businesses by providing an e-commerce platform. The process is handled through the Fulfillment by Amazon (FBA) service, which enables enterprises to outsource order fulfillment to the company. The most efficient and effective order fulfillment service can afford a business an opportunity for growth and competition.
The fulfillment service covers a range of activities, including managing customer orders, sending shipments on time, and collecting the latest information on products. Amazon further enables businesses to access prime customers and has expanded its operations to control a vast share of e-commerce business in the U.S. However, the company can encounter challenges characterized by fulfillment failure. The problem can arise if items get damaged in the delivery process and fail to meet customer expectations, which can hurt the e-commerce trade and pose a strategic challenge for Amazon.
Pie Chart of Amazon Performance
The pie chart presents a good way of displaying data involving Amazon’s performance, which can be segmented into categories such as market share. Ertz (14707853211023036) states that Amazon controls an inventory of more than 12 million items across all the product classes and services. According to Ertz (14707853211023036), the company’s involvement in handling products from other businesses increases the total portfolio to over 350 million.
According to Arishekar, Amazon sells close to 565 million products in the U.S., making it the largest e-commerce company in the country. The volume represents immense visibility and leads to increased sales and competition, even as the company has robust offerings and low prices. Ertz (14707853211023036) indicates that Amazon controls a market share of about 39 percent of the total e-commerce trade in the U.S., which is 64 percent of the share controlled by the top ten companies. The information is captured in Chart 1 under Appendix, indicating the market share of the top 10 e-commerce companies in the U.S.
FBA Process Flow Chart and Strategic Concern
The FBA service can be characterized as a process flow chart. Chart 2 in Appendix indicates how the FBA evolves from ordering to when an enterprise sends products to Amazon for fulfillment. Sun (637) indicates that Amazon also handles picking, packing, and storing products before they are delivered to the customer. It also provides customer services and processes returns for orders.
Failure in the process arises when the delivery is unsuccessful, especially when the product is damaged and does not meet customer expectations. There are cases when there is high demand, and customers can place many orders through the online retail platform that may need delivery within a short duration. Arishekar indicates that the Amazon app and website receive close to 2.5 billion visits every month, and the FBA program covers over 9.5 million sellers drawn from all parts of the world. It is possible that, given the scale of the company’s operations, fulfillment failure can occur, which, according to Jiang (105749), can increase negative reviews. Therefore, a business has to conduct a proper investigation to establish the root causes.
In the case of Amazon FBA, problems could develop in the warehousing department when the company receives a high volume of orders. The increase in demand may need to be adequately matched to the speed of delivery, leading to an increased backlog of orders. The problem can mainly arise if Amazon needs to conduct accurate forecasting to estimate the demand best and be adequately prepared to handle the spike in sales.
The increased volume of products in the warehouses will cause a massive pile of items awaiting delivery. Once the products are lumped together, some goods can get damaged or broken. If the issue is not detected early, the products will be delivered to customers when damaged. Eventually, the customer will note the fault in the product provided and may return the product or request a refund, leading to a fulfillment failure. The problem could affect Amazon’s overall strategy and needs to be addressed promptly.
The identified root cause of the fulfillment failure is inappropriate forecasting and poor handling of products in the warehouse. The best solution would be to adopt modern and effective methods and tools for forecasting demand based on different seasons and improving the warehouse organization. For instance, the floor plan of the warehousing facilities can be adjusted to avoid fulfillment failures in the future.
Jiang (105749) argues that the company can enhance the process of rack labeling and slotting to ensure that ordered items are well placed in the warehouse. Additional safeguards include creating clear pick paths and improving lighting to facilitate easy movement in picking orders due for delivery. The company can further outsource the warehousing functions when demand is expected to be high to facilitate the safe delivery of products in good condition.
Conclusion
Amazon is a leading e-commerce company in the United States. The company controls the country’s largest market share of online business and handles enormous sales every year. It has established the FBA to help other enterprises sell products through its platform. Challenges could arise if proper forecasting is not conducted to show periods when the company may experience a spike in product demand. Shortcomings in the warehousing facilities could further compound the problem. Amazon can handle the challenges by instituting proper and efficient forecasting and improving the warehousing processes to improve effectiveness in handling products in peak times.
Works Cited
Arishekar N. “Amazon Statistics (Seller, FBA, and Product) That’ll Surprise You!!”. 2023. Web.
Ertz, Myriam, et al. “Predicting M-Shopping in the Two Largest M-Commerce Markets: The United States and China.” International Journal of Market Research, vol.64, no.2, 2021. Web.
Jiang, Dain, et al. “Integrating order delivery and return operations for order fulfillment in an online retail environment.” Computers & Operations Research, vol.143, 2022, p.105749. Web.
Sun, Libo, et al. “Fulfillment by Amazon versus Fulfillment by Seller: An Interpretable Risk-Adjusted Fulfillment Model.” Naval Research Logistics (NRL), vol.67, no.8. 2020, p.627 – 645. Web.
Appendix
