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How Amazon Can Extend Your Fulfillment Capabilities

Amazon has long been known as a market leader in technology and Ecommerce, but it’s also become a powerhouse in recent years when it comes to fulfillment. Today, Amazon is as much a delivery service as it is an Ecommerce giant thanks to some significant investments in fulfillment infrastructure. 

There’s an interesting parallel here to observe in how Amazon has historically approached its business. Back in 2006, Amazon had built an enormous web hosting infrastructure to support its exploding Ecommerce operation. That’s around the time when the web went from being almost wholly static pages with information to being able to run applications. Amazon saw its opportunity to leverage its own infrastructure and began offering its IT infrastructure services.

As a result, Amazon today maintains a dominant position in offering cloud infrastructure services with its Amazon Web Services division.

Now they’re doing the same thing for fulfillment. Let’s take a closer look at how Amazon is poised to take over the third party fulfillment business, and how B2B companies can leverage it to add to their supply chain capabilities. 

Meet Amazon Supply Chain

In 2023, Amazon introduced Supply Chain, “an end-to-end, fully automated set of supply chain services” that enables sellers to move products from manufacturing locations to their customers. Supply Chain grew out of Amazon’s Fulfilled by Amazon (FBA) service, where sellers can store Amazon stock in Amazon-owned and operated warehouses (in Amazon parlance, “fulfillment centers”). FBA relieved sellers of the burden of having to store, pick, pack, and ship products sold on Amazon. (Side note: In case you’re not familiar with it, check out this article that provides all the ins and outs of using FBA.) 

Over the years, and particularly after the pandemic, Amazon recognized that the supply chain had grown increasingly complex and unpredictable, and that fulfillment doesn’t start in a warehouse. It starts at the manufacturer and often in overseas locations. 

Supply Chain by Amazon makes shipping products from a manufacturing origin point incredibly easy, removing a lot of the barriers for B2B firms to enter the marketplace. With this service, Amazon can: 

  • Collect inventory in bulk from a manufacturing origin point

  • Ship items across borders and handle all customs clearance as well as local ground transportation

  • Store bulk inventory in Amazon distribution centers

  • Manage replenishment across all of Amazon and other sales channels (e.g. distribution centers, branches, stores, and other facilities)

  • Directly deliver products to customers. 

That’s a lot of heavy lifting that manufacturers can now pass off to Amazon. 

What’s more, Amazon recently introduced Amazon Warehousing and Distribution (AWD), a part of Supply Chain by Amazon. This service is designed to manage supply chains across multiple sales channels, including fulfillment for sales taken from a company’s own website. 

Consider this: Amazon has now become the standard for both consumer and B2B fulfillment/delivery, often delivering the next day or even the same day. The company has built a massive infrastructure to meet and exceed buyer expectations for fulfillment times and accuracy, including more than 200 fulfillment centers around the globe; a fleet of thousands of trucks, vans, and more; a private cargo line; drone delivery tests; and a huge network of both in-house and outsourced delivery drivers. As a result, Amazon now delivers more packages to U.S. homes (and businesses) than both UPS and FedEx. In 2023, they delivered more than 4.8 billion packages in the U.S. alone. 

To put it bluntly: It would cost a company billions of dollars to even come close to Amazon’s infrastructure. 

Amazon AWD Service: The Next Step in Increasing Your Product’s Reach

As anyone in logistics will tell you, the “last mile” delivery is the most difficult part of putting products into customers’ hands. There are many things that can go wrong—traffic, accidents, road closures, and weather conditions, to name a few. 

But Amazon has made the last mile delivery far simpler. As mentioned above, the company recently introduced its Amazon Warehouse and Distribution service, a bulk storage option that allows manufacturers to not only store products in Amazon’s fulfillment centers, but also at their distribution centers. 

The AWD service is a step back in the supply chain, designed to manage inventory before the FBA stage. AWD is designed to move products through the fulfillment process quickly in small quantities by replenishing fulfillment centers at optimal times in optimal quantities using Amazon’s algorithms. 

But most importantly, as part of Amazon’s supply chain services, you can use those same AWD distribution centers to stock into your own stores, warehouses, and more. 

Amazon has effectively become a third-party logistics company, or 3PL, a class of companies that provide warehousing and distribution services to manufacturers, distributors, and retailers. Traditional 3PLs are no doubt feeling pressure, as Amazon can do this at a scale and cost that is difficult to match.

How Amazon’s Fulfillment Helps B2B Manufacturers

So, what does all this mean for B2B manufacturers? 

The truth is that many B2B manufacturers are simply not set up for shipping anything but large, bulk orders. These firms have historically not needed to invest in creating the infrastructure for fulfilling small quantity orders.  To create these capabilities, it would cost these firms an enormous amount, particularly if they seek to replicate what Amazon has built. 

Amazon has now made it easy for these manufacturers to do small quantity (FBA) fulfillment, but also to manage fulfillment across the entire supply chain. This empowers manufacturers to move beyond one of the largest traditional constraints preventing them from developing  and operating their own Ecommerce websites. Today, these manufacturers can more easily meet the needs of B2B Ecommerce buyers, leapfrogging the need for deep, specialized infrastructure to support a scalable digital commerce channel.

Ultimately, Amazon’s massive investment in fulfillment infrastructure doesn’t only benefit Amazon, but it’s also providing opportunities for other businesses to extend their own supply chains. By leveraging Amazon’s services, businesses can overcome their own limitations and meet the shifting demands of today’s B2B buyers. 

In other words, Amazon is not just a retail giant. It’s now a powerful partner in supply chain management.

Want to learn more about how to leverage Amazon’s services to grow your B2B business? We can help! Enceiba has worked with hundreds of manufacturers to create and refine high-performing Amazon storefronts. Connect with us to discuss how we can help you grow your business. 

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