Amazon’s Global Supply Chains
Amazon.com Inc.—typically referred to as just Amazon—
has ranked among the top companies for years in the
“Gartner Global Supply Chain Top 25” ranking. Other
regular entries among the companies with the best global
supply chains include Unilever, McDonald’s, and Intel.
Amazon is passing through about $160 billion in sales via
its global supply chain channels and partnerships annu–
ally, a staggering amount given that the company seldom
takes possession in any true sense of the products that it
channels to customers from various companies.
Amazon is based in Seattle, Washington. It has now
become the largest online retailer in the United States,
surpassing Walmart as the most valuable retailer in 2015 by
market capitalization (but Walmart’s revenue is still gigantic
at about $500 billion annually). Amazon started in 1994 as
an online bookstore but has diversified to a variety of prod-
ucts, including music downloads, furniture, food, and almost
all consumer electronics. These days, customers can seem-
ingly buy anything they need via the Amazon platform. In the
United States alone, roughly 150 million customers per
month visit Amazon.com. But this massive availability of
products also puts a strain on Amazon’s global supply chains.
As customers, we have come to expect that Amazon
will deliver whatever we buy in the shortest cycle time possible, often no more than two days,
especially if a customer is signed up for Amazon Prime. The Amazon
Prime service includes free two-day shipping (on many
products), video streaming, music, photos, and the
Kindle lending library for an annual fee (currently
$99 per year or $10.99 per month). All these services are
welcomed by customers, but the free two-day shipping is
really what drives the Amazon Prime service.
The free two-day shipping (and a myriad of other ship-
ping alternatives for a fee) requires Amazon to leverage
its inventory management practices, global supply chains,
and technology to cost effectively reach customers. Deliv-
ery speed and efficiency require Amazon to have strategi-
cally located fulfillment centers worldwide that can be
used by select vendors on the Amazon platform. This in-
cludes strict requirements for packaging, labeling, and
shipment. Amazon stores these vendors’ products in bulk
or in individual “pickable” locations.
So far, in addition to the United States, Amazon has
retail websites for Australia, Brazil, Canada, China, France,
Germany, India, Italy, Japan, Mexico, the Netherlands, Spain,
the United Kingdom, and Ireland. And, the Amazon Prime
service places great strain on Amazon’s supply chains where
it is available in its worldwide locations (e.g., Canada,
France, Germany, Italy, Japan, and the United Kingdom).
In addition, Amazon’s customer service centers span
some 15 countries worldwide. Plus, the company operates
retail websites for international brands such as Sears
Canada, Bebe Stores, Marks & Spencer, Mothercare, and
Lacoste. This means that Amazon is benefiting from both its
global supply chains for delivery of vendors’ products and its
service as a technology supply chain vendor to businesses.
Another interesting development—or, at least, idea at
this stage—is the speculation that Amazon is thinking
about launching a global shipping and logistics operation
that can compete with United Parcel Service (UPS) and
FedEx. Of course, Chief Financial Officer (CFO) Brian
Olsavsky downplayed Amazon’s ambitions on this front.
He said that Amazon was just looking to supplement its
delivery partners—not replace them—during the very busy
peak periods like the holiday seasons.
Sources: Todd Bishop, “Amazon Sales Rises 22% to $43.7B, Profit Beats
Expectations But Stock Slips on Revenue Miss,” GeekWire, February 2,
2017; Spencer Soper, “Amazon Building Global Delivery Business to Take
On Alibaba,” Bloomberg Technology, February 9, 2016; V. Walt, “How Jeff
Bezos Aims to Conquer the Next Trillion-dollar Market,” Fortune, January 1,
2016; B. Stone, “The Secrets of Bezos: How Amazon Became the Everything
Store,” Bloomberg Business, October 10, 2013; A. Cuthbertson, “Amazon
