Amazon Supply Chain Management

A research that aims to highlight How supply

chain management contributes to company

success and domination in markets and to

customers’ satisfaction at the same time.

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 Content Table

1. Introduction: about Amazon company

2. amazon objectives and business nature

3. amazon vision and mission

4. Competitive advantages

5. Production activity

6. Supply ,marketing and distribution chain

7. Supply chain risk management

8. Conclusion and recommendations

9. References

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● Introduction : about Amazon company

Back to the 1990s, 28 years ago, specifically on July 5 1994, It was then when Jeff Bezos[1], an American entrepreneur , founded

“Amazon” ,from his garage in Washington, which initially started as an online bookstore that later on, has managed to develop

itself and diversify the products it affords to customers , Amazon succeeded in expanding into multiple other categories of goods

such as in media (movies and music) , groceries, electronic devices , baby needs , make-up and beauty care products , it also started

to afford jewellery , clothes , toys and many other industrial supplies . Amazon continued on growing since it began to provide its

customers many web services through its websites that are visited regularly from millions of people all around the world. Amazon

managed by several purchases, agreements and partnerships with other famous businesses to become one of the largest retailers in

the world and one of the Big Five American information technology companies. Amazon has surpassed its rivals by its constant

and eager development , growth , expansion and its commitment to its customers satisfaction .

● company’s objectives and business nature

Although amazon reputation is highly recognised , the company still has its growing and expanding

goals . amazon clears that it is driven by several principles ,for them , customers’ satisfaction and

obsession is a prioritized objective , thus , the company works hard to earn and keep the customer’s

trust , it is aware of the continuously changing and growing needs and desires of customers , and this

leads the company to strive to make customers’ lives better and easier every day[2]; customers

always want better and the company finds it its job to listen to their feedback and to also imagine

what else is possible and invent on their behalf. Amazon is considered an innovative company that is

relentlessly debating, re-defining, tinkering, iterating and experimenting to get the seed of a big idea

and make it into something that resonates with customers and changes their experience meaningfully

for a long1 period of time. amazon strives to be the Earth’s most customer-centric ,Earth’s best

employer and2 Earth’s safest place to work[3]; by investing in employees and offering them
1
“ Amazon Empire: The Rise and Reign of Jeff Bezos”
2
Amazon.com, Inc. 2021 Form 10-K Annual Report". U.S. Securities and Exchange Commission. February 4, 2022
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aboutamazon.com

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hundreds of considerable opportunities that help them to train and improve their skills , amazon also

focuses on the safety and health of their employees as it is committed to offering several benefits for

employees and their families including domestic partners and their children- starting with healthcare

from day one. We can sum up the business nature of amazon company with : supported and carefully

chosen work teams and employees making their best to think big , stick to high standards , make

improving decisions, invent and to respond wittily to customers demands and aspirations while

paying attention to all possible changes and challenges in the world of business at the same time.

● Amazon vision and mission

Amazon’s vision springs up out of a clear awareness of the constantly changing and growing needs

and desires of customers all around the world and of a core belief of the importance of using the

Internet to create a real value for customers beside saving their money and precious time. In light of

that, amazon adopts an approach described as “Day 1”[3] ; this mentality drives the company to do

everything with the energy and entrepreneurial spirit of a new organisation on its first day. The

company focuses as well on the concept of “ the long term “ , they believe that a fundamental

measure of the company’s success is the shareholder value they create over the long term . which

will be a direct result of their ability to extend and solidify their current brand and customer base.

Amazon is equally committed to learning , planning , finding new ways to expand their business and

prioritizing their investments. Although they are optimistic , they realize the need to remain vigilant

with a sense of urgency , in order to respond to the challenges and possible hurdles that will face the

company’s long term vision to become a reality[4] .Taking into consideration its wide vision ,

amazon clearly defines its mission with several broad lines. Their obsess over customer comes first

when speaking of their mission;” we strive to offer our customers the lowest possible prices, the best

available selection , and the utmost convenience “ with this statement amazon states what their

https://www.aboutamazon.com
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Amazon.com Inc. Report

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customers should expect from them. The company targets offering customers the best offers divided

into three fields;

1. Affordable prices : amazon is seriously concerned with the spending of its customers , thus ,

the company does its best in order to afford reasonable prices of different products and

services without compromising on quality . amazon ensures that the costs of its operations

stays at the minimum in order to be enabled to offer competitive prices and services.

2. Varied selection: amazon diversifies the range of services and products for its customers to

shop. this characteristic is one of the major reasons why amazon gained its popularity as a

place where one can find literally everything with the most ease and zero effort.

3. Utmost convenience: amazon considers online shopping a priority , it understand how this

has become one of the most appropriate ways for customers to get whatever they need and

whenever they do. In order to translate this understanding, amazon collaborates with reliable

stakeholders to ship all orders of its customers fast and with no respective of their location.

Another mission of amazon company is to be the safest and best place to work in the world, thus,

amazon has some strategies when it comes to hiring and empowering its employees. It is clear for

amazon that their success will be largely affected by their ability to attract and retain a motivated

employee base; therefore, amazon has developed its own “leadership principles”[5] which state

that each employee must be a leader who acts like an owner ,as they work on behalf of the entire

company . for amazon leaders are those who think big , look for new ideas from everywhere and

seek to improve themselves all the time , they are never done learning and developing , leaders are

continuously raising the bar and driving their teams to deliver high-quality products , services and

processes. However , for amazon , one important mission is to hire the right builders, organize them

into teams that are as separable and autonomous as possible , and giving them the right tools and

permission to move fast in order to achieve the main objective of the entire company. 3

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● competitive advantage

There is no doubt that amazon has become one of the most influential economic forces in the world ,

the retailer is growing and expanding at a fast pace ,as the growth of the company’s sales tells .

Based on a research by packaged facts, there are some factors that helped the company build such a

formidable competitive advantage , one of these major factors is The Amazon Effect[6] , which is

defined as the ongoing evolution of the retail market ,both online and in physical outlets, resulting

from increased e-commerce . this name is an acknowledgment of the company’s continuing

domination in online sales . amazon’s dominance has not only challenged traditional brick business

model , it has also transformed consumer expectations and reset industry standards . amazon is also

globally known for offering free shipping and convenience ; with the onset of amazon’s one-day

free shipping , competitors of other retailers find themselves in a ” delivery speed arms race” .

Amazon also heats up the competition by expanding from one category to another “ books , pet

products , electronics , toys and groceries”. Amazon offers a vast selection of different products at

competitive prices as well , no hassle returns , an easy check-out experience ,and a huge repository of

reviews which help to make Amazon the best option for a growing number of customers. Another

prominent strategy adopted by Amazon is cost leadership , it is clear in detail through history and

time line how the company tried its best to reduce all operational costs and took into consideration

the importance of embracing a cost-conscious culture. Other growth strategies such as market

development , market penetration , product development and diversification contributed in the

competitive advantage of Amazon company. Furthermore , Amazon has a great localization [7]

strategy; Localization is defined as a form of personalization, through which target customers are

provided with more contextual merchandising and content. This strategy states that in order to

expand globally, companies need to get into unfamiliar foreign markets , communicate with its

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https://www.amazon.jobs › principles Leadership Principle
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consumers and afford them better shopping 4experiences that fit their local practices; when speaking

of Amazon’s localization strategy , amazon put a lot of consideration on the cultural norms of

customers all over the world, thus it is aware of the importance of adapting and innovating its

business model in order to operate successfully in varied foreign markets around the world , for

example, the design of the company’s website in the UK differs from that of the USA, Japan or India

, each presents a certain country and culture suitable context ,same for the other values and focuses

on presenting a diverse range of products according to each market consumer’s preferences .

● production activity [8]

Amazon was born at the start of the famous period of the “new economy” (introduction of computers

into businesses and homes , the internet ..etc.) , whose main processes was largely founded on the

technical basis of new information technology . Amazon, however , with its expansion strategy and

clear awareness of the continuous changing in online businesses , managed to overcome challenges

and to maintain its scheme of production development , the company has now become one of the

strongest businesses in the world, and that is due to its effort in growing its parts of the market in

anticipation of the next sudden change. Amazon is also now one of the Big Five American

companies in information technology . It is already cited that amazon is an e-commerce platform that

offers a wide variety of products , like books ,movies , software , apparel, baby products , consumer

electronics , jewellery and beauty products , it also sells kitchen items, , watches, lawn and garden

items, musical instruments, sporting goods, tools, automotive items, toys and,

farm supplies and consulting services. Amazon also sells other products under its own brand name

including phone chargers , batteries and diaper wipes . along the different stages of its activity ,

amazon has entered many agreements and partnerships that allowed it to expand the categories of its

production , for instance , in 2011, amazon announced a partnership with DC comics for the

48 sustainability.aboutamazon.com
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Partnerships - Amazon Sustainability

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exclusive digital rights to many popular comics ,including superman, batman, The Sandman ..etc.

which forced other well-known bookstores to remove them from their shelves . amazon also

indulged other famous brands in its market, offering them the ability to sell their products through

the company (Nike in 2017,for instance ). Concerning its production activity , amazon started to

offer many products and services that raised its sales and reputation at the same time, for example ,

Alexa, the digital assistant ,Amazon music and prime video for music and videos , Audible , which

offers audiobooks for purchase and listening . their eagerness to invent and innovate led them to

design and manufacture devices like Kindle, FireTV and echo . The acquisition of many other

subsidiaries , such as Amazon web services , Twitch , zappos and zoox , also explains the enlarging

production activity of Amazon. However , Amazon company appears to be constantly improving

and empowering its production range and activity by being committed to its goals of satisfying

customers and applying to their upcoming needs.

● supply , marketing and distribution chain

1. supply chain :

Supply chain is a major interest for companies that are striving to prove their existence and

domination in business world , its main mission is to minimize total costs with the help of proper

management; In the case of Amazon , the supply chain of the company has been a critical element to

its success , Amazon has one of the biggest and most efficient supply chain operations globally ,

although the company’s basic model has remained the same since its inception , it has adopted newer

technologies over the years in order to empower its processes and improve their efficiency . Supply

chain includes the entire stages of on the platform, from product warehousing and inventory to

pricing and end customer delivery . Over the years the company has devised new ways of the

optimization of every stage of the supply chain process[9] , in order to ensure that everything is

working smoothly and efficiently so the can guarantee their customer satisfaction.

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Stages of Amazon supply chain:

1. Manufacturing : although amazon started its business journey by selling books online to

eager readers, the company later began to add its own product lines under private labelling ,

including5 diaper wipes , batteries, toothbrushes, etc. Amazon’s manufacturing vision can be

summarized as an intention to produce analogs of the most popular products at low prices ,

in order to increase the company’s sales and profits. However, amazon remains a company

that provides various manufacturers with a marketplace and regular need for supply.

Although third-party sellers are still operating on the marketplace , their numbers had

decreased since the company realized that it is cheaper and more profitable to assemble its

own low-cost products , which allows it to control the whole product lifecycle from

manufacturing to delivery. In general, the company used to be between customers and

manufacturers, however, it is now involved deeper into the world of manufacturers.

2. Warehouse/inventory : taking amazon’s goal of increasing sales into consideration, its

warehousing strategy becomes the most important stage of its supply chain management .

The main objective, is to establish an elaborate system of inventories that provides anytime

and everywhere access to the products offered by the retailer. Amazon has a respectful

infrastructure of warehouses , as they are usually located around large population regions ,

while small ones are found near smaller towns in order to enrich the experience of customer

who live far from city centres . Amazon started establishing its inventory system when first

built the distribution network by opening two fulfillment centres in Delaware and Seattle in

1994. Later the US postal service was used by the company to deliver orders to customers .

Then amazon head to achieve more expansion by opening other fulfillment centres in Europe

and other regions of the U.S.

Johnson, P.F., & Mark, K. (2018). Amazon.com: Supply Chain Management. London, Canada: Ivey
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Publishing.
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 3. Delivery: one of the strongest characteristics of the Amazon supply chain strategy that makes

it on top of its rivals is the variation and abundance of delivery ways the company offers to

its customers . generally, customers have the freedom of choice from such basic options:

standard shipping, Prime now option , the free, two-days delivery etc. Short time delivery is

highly considered ,however , it is the number of delivery options that changes the game ,

amazon adopts different strategies from traditional to high-tech ones , all aiming at one goal,

which is to provide customers with preferred time and place requirements. Those strategies

include collaborating with existing logistic companies such as FedEx ,DHL, UPS, Amazon

delivery service, delivery by cars , bikes , and even drones . This diversity allows the

company to deliver customers orders from any part of the world in the fastest and most

feasible way . Amazon was aware that the traditional delivery strategies are used by other

retailers , so they had to implement new peculiar ideas in order to gain a comparative

advantage in delivery, thus , Amazon launched a game-changing strategy presented by the

Amazon Prime service , this service includes an elite package of offers for members who had

to pay an annual fee , members were granted two-day delivery on a wide variety of different

products. After having this strategy replicated by other retailers , the company hassled to stir

up the business by launching the Amazon Prime Now service ,which offers a one-hour

shipment. Amazon’s hunger for innovation and domination appears by other prominent

delivery ways that the company is continuously improving and expanding , such as Prime

Air , this strategy of using drones in order to change the rules of delivery game , and of

course to fulfill the giant retailer goal of satisfying their customers and surpassing their

competitors at the same time.

To conclude, the case of Amazon’s supply chain , provides the world with a clear view of how

successful supply chain management brings many considerable advantages for the company , as total

cost reduction and faster processing of orders .

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2. Marketing strategies and channels

Amazon believes that “ a brand’s marketing strategy is long-term plan for reaching shoppers , as it

encompasses products and pricing offers as well as brand marketing and the promotion of products “

[6]. For years Amazon has been a master in marketing and advertisement, it is clearly seen how the

company’s marketing strategies managed to evaluate its activity and impact on business scale over

years .

1. Amazon marketing strategies :In order to fulfill its obsession with customers demands ,

hence the urgent need to develop prominent marketing alongside innovating on behalf of

customers , Amazon uses various marketing strategies in its international business , that help

them raise the company’s sales and global expansion. Amazon marketing strategy is based

basically on several pillars :

○ offering a wide range of products and services at reasonable prices : the largest online

retailer in the world by revenue, offers hundreds of millions of products and services that

dominate nearly over all categories of businesses at mostly accepted prices as well.

○ using customer-friendly interface : driven by its vision of being a customer-centric

company ,Amazon has an elaborate interface that is ever-improving in order to apply to

customers personalized recommendations and aspirations .

○ scaling and expanding easily from small to large and vice versa : the prominent e-

commerce company has the ability to scale its products and services depending on aspired

amount , this has allowed the company to disrupt increasing ranges of businesses such as

entertainment , transportation , and new industrial distribution .

○ making good use of affiliate products and resources : insisting to stay up to date , the giant

retailer has taken the advantage of exploiting affiliate products , programs and resources in

order to contribute to the decisive point in business .

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 Amazon marketing strategy is also based on multiple principles that mainly focus on product

and place elements of the marketing mix . Offering millions of products not only in the USA ,

but also in different parts of the world ,Amazon has the widest product range among online

and offline retailers , Moreover , the company’s ability to offer its products for competitive

prices due to real cost savings according to the online business nature operations, is highly

recognised . Amazon main practices are associated with its target of expanding the customer

range to the widest. The company does this with applying multi-segment And adaptive

positioning techniques. The giant e-commerce company uses unique selling proposition that

are at the core of its marketing message, these include the most varied choice of products and

services offered with competitive prices, fast delivery and best customer service experience .

2. Amazon marketing channels : the company focuses on a marketing communication mix that

integrate print and media advertising , sales promotions , events and experiences , public

relations and direct marketing . It also uses product placement as an effective marketing

strategy , for instance , Amazon Echo smart speaker that has featured in a number of shows

such as “Dagoba , a Room and Chimney sweep “(2022) . such instance and many others are

good examples of successful product placement by amazon.

Pay Per Click (PPC) , is another notable outstanding marketing campaign used by Amazon ,

this marketing strategy allows merchants to pay per click advertisements from

Amazon.com.inc. however , Amazon has mastered using this strategy for long time and it all

applies to the company’s objectives in marketing and business domination.

3. Amazon Distribution chain : Amazon defines its distribution network with regards to product

and service sales , fulfillment of orders, customer satisfaction ,publishing , digital service

subscriptions and advertisement. As a result, Amazon company is committed to provide its

customers with respected benefits and experiences . recognising that “ distribution systems

will be one of the things that will separate winners from loser “ from early on in 1999

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 “decided to take command of inventory and shipping activities themselves” (Kargar, 2004).

Amazon recognized that all the best websites, marketing, or other features would be useless if

the products were not delivered on time. It then determined that the expansion of its own

distribution centres would increase efficiency and decrease shipping costs, and by 2001,

Amazon operated an aggregate of over 4 million square feet of fulfillment facility spaces in

Delaware, Kansas, Kentucky, Nevada, North Dakota, and Washington in the United States

and abroad in United Kingdom, and other parts of Europe, Currently, Amazon operates an

aggregate of over 138,825,900 active square feet of warehouse spaces in 28 states throughout

the United States and Canada, Mexico, United Kingdom, Germany, France, Italy, Spain,

China, Japan, India, and Brazil (MWPVL, 2017). In the beginning, Amazon packages were

typically picked up by UPS, FedEx, or the U.S. Postal Service at one of the fulfillment

centres. However, in addition to the cost issue, these third-party delivery companies have not

always been reliable, and when UPS and FedEx failed to deliver thousands of packages

guaranteed to be delivered by Christmas (Jayakumar, 2013), Amazon was forced to intervene

and make strategic moves to gain more control over its delivery system: To “increase

capacity for package delivery”, Amazon purchased thousands of semi-truck trailers “to

transport packages between fulfillment and sort centers around the country” (Stewart, 2015).

In recent years, more and more Amazon packages are handled internally by sorting the

packages by the ZIP codes then trucking the sorted packages to a Postal Service facility near

the destination. The Postal Service then takes care of the final delivery (Weise, 2016). Similar

strategy is seen in other countries with respect to local deliveries. Amazon is reportedly

operating 240 delivery vans through 6 sub-contractors in Germany and delivering about half

of its last mile deliveries to customers’ front door directly using its own trucks in the UK, a

strategy likely to be utilized in other European countries (Spend Management Experts, 2016).

Amazon’s strategy for local deliveries does not stop there. Amazon is experimenting drone

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 delivery service called Prime Air, and in December of 2016, “Bezos announced the first ever

Amazon Prime Air customer delivery”, which took place in the UK (Silver,2016) . Amazon’s

aggressive expansion of its logistic enterprise contributed into the company’s well control of

the shipping costs and efficiency , as it allowed the company to avoid all possible problems

when it comes to trucking , warehousing, and shipping problems, which also require contracts

with multiple companies for merchants and manufacturers, Amazon would handle all the

paperwork, shipping, and transportation of their products, which would then be stored in one

of Amazon’s fulfillment centres , making the products available to its over 310 million

customers (Statista, 2016) through “fulfilled by Amazon” and Prime. “Amazon directly

imported about 10,000 20-foot containers into the U.S. last year and received an additional

20,000 containers from merchants as part of the company’s Fulfillment by Amazon program”

(Saito & Goh, 2016). However, Amazon’s distribution strategies demonstrate that Amazon

will continue to focus on developing and implementing new and creative distribution

strategies to separate itself from the rest of the retail and e-businesses competitors .

7. supply chain risk management [22]

There is no doubt that the Amazon supply chain is one of the most efficient in the world . The well

known e-commerce giant is highly recognised for its diversified and successful operations. However,

despite the company’s supply chain efficiency , there will always be some possible risks that might

come across the way; these risks are mostly associated with shipping and fulfilling orders. Theft,

damaged packages, returns, and even geopolitical risks are just some of the hard-to-predict factors

that might affect the whole experience . for instance ,Inventory order delays are widespread across

ecommerce businesses on Amazon. Unfortunately, sellers tend to experience delays that last longer

than one month on inventory orders. Such delays can have a negative impact on Amazon sales and

affect revenues . Another possible risk is high shipping costs that are hitting ecommerce businesses’

bottom lines , particularly those that import their goods from afar. However, there are many other

14
challenges that might face the supply chain process but the main concern for companies is always

improving and adopting strategies that help in avoiding and solving most of these disrupting issues.

○ In order to overcome supply chain risks and challenges Amazon has taken several steps that helps

in responding positively to urgent needs of the efficiency of its business :

1.Amazon gives extra attention to the capability of applying to the enlarging demands of customers .

The Incorrect forecasting of demand has a negative impact on customers satisfaction, thus , one of

Amazon’s major concerns is to address the demand and supply problems by stocking up more

inventory to meet the possible large quantity of orders, for instance, during Prime Day and Holiday

season. they rely heavily on past numbers and current customer trends to make decisions long before

events or holidays.

2. establishing better reliable ways for more deliveries : accomplishing last-mile delivery of goods,

especially during peak seasons like Christmas, is a challenge for Amazon , for example , Amazon

has major logistics breakdown in Christmas 2013 , which had resulted in many customers failing to

receive their orders , this pushed Amazon to prepare for taking over the last-mile of deliveries by

working on becoming the world’s biggest shipping company with establishing its own shipping and

delivery network.

3. developing Technical Infrastructure: Amazon has launched the AWS (Amazon Web Service )

which is the biggest cloud computing company in the world, However , there were times when

customers had some complains about the site functionality and sufficiency thus, the company is

aware of the need of constant addressing and dealing with urgent technical challenges; by hiring

specialized improving teams and launching useful dedicated programs . Amazon’s ambition of

dominating and surpassing competitors in the online business world , drives the company to

15
continuously out-innovate itself in order to overcome all possible obstacles . In conclusion, Amazon

manage to overcome challenges by staying connected, and focused on the fact that customers

demands and satisfaction are always in the first place of all supply chain processes

● Conclusion and recommendations

At the end of the day , we come to conclude that Amazon company is one of the best business

experiences when it comes to goals , missions , accomplishments , and achievements on the scale of

e-commerce industries . It is clearly recognized that the company had been a game-changer in the

world of business , its basis on the continuing inventing, innovation , operational development and

commitment to afford its customers the best experience of shopping , choosing , buying and

receiving aspired products and services at the best possible prices , altogether , raises its name as a

giant retailer and one of the largest dominating online businesses in the whole world , Amazon by its

clear honourable history and enthusiastically growing present has the right to aspire to a bright

future with a globally respected outstanding reputation . Amazon is still one of the best examples that

can afford the world of business a handout of successful marketing strategies and supply chain

management lessons for any new or going-to be companies . businesses that are about to launch can

surely benefit from Amazon experience, as they can make use of all the services and empowering

programs that the company itself afford to beginner companies or business establishers . It is highly

recommended , in such an enlarging world of business to take into consideration such successful

experiences as like of Amazon’s in learning and developing business outlines, strategies , processes

and development tactics . In conclusion , Amazon gives a great hope of a better , safer , brighter and

more sufficient world of business in the nearly coming future of the our world .

● References

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