由 caicai8478 Amazon’s launch of its “Fully Managed Logistics” service signals its commitment to addressing emerging competitors like TEMU, SHEIN, and TikTok. Will this move shake up the entire supply chain management market? And what impact will it have on freight forwarders and overseas warehouse operators?
· Amazon launches fully managed logistics to address emerging competitors like TEMU
· Since the beginning of this year, a wave of innovation has swept the cross-border e-commerce sector, with e-commerce giants like TEMU, SHEIN, TikTok, and AliExpress joining the ranks. This has led to widespread speculation about whether and when Amazon will launch a fully managed model. This has put Amazon at the forefront of public opinion. Amidst fierce competition, Amazon has made numerous adjustments to its platform policies and launched a variety of logistics initiatives.
In September, Amazon announced the launch of its comprehensive Supply Chain by Amazon solution, which many interpreted as a sign of its commitment to fully managed logistics. Amazon Supply Chain is an end-to-end, fully automated supply chain service that helps sellers quickly and reliably ship their products directly from manufacturers to customers worldwide, managing their supply chain on top of Amazon’s fulfillment services.
Strictly speaking, Amazon’s fully managed service is not exactly the same as other platforms’ fully managed services. Amazon is more like “full logistics management.” For example, TEMU provides greater control over the products, with sellers not even having pricing control. Amazon Supply Chain Services, on the other hand, simply simplifies the seller’s logistics process, allowing them to focus more on building their products. While other platforms manage the products, Amazon manages the logistics.
Amazon Supply Chain operates as follows: Amazon Global Logistics (AGL) handles the first leg of international trade; streamlined Amazon Warehouse Distribution (AWD) warehousing in the country of sale through the Partnered Carrier Program (PCP); an upgraded and cost-effective Amazon Warehouse Distribution (AWD); new Multi-Channel Distribution (MCD) capabilities; and automatic replenishment of inventory to Fulfillment by Amazon (FBA).
The warehouses here can be Amazon warehouses, seller warehouses, or third-party warehouses. If goods arrive from Amazon warehouses and are sold on the platform, Amazon will ship directly. Amazon warehouses can also allocate inventory to wholesalers or other warehouses. If goods arrive from sellers or third-party warehouses, Amazon can pick up goods from those warehouses and ship them by express.
Amazon Supply Chain Flowchart Source: Amazon Global Selling Official Account
In other words, as long as the goods are from Amazon sellers, whether on the Amazon platform or other sales platforms, and whether or not they arrive at Amazon warehouses, Amazon’s supply chain can always handle one or all stages of the process. This entire process involves picking up goods from factories around the world, cross-border shipping, handling customs clearance and tariffs, bulk inventory storage, managing replenishment from the seller’s other channels, and finally, customer delivery—a process that has a bit of a “nanny-style logistics outsourcing” feel.
Previously, Amazon’s logistics and fulfillment services were primarily provided to Amazon sellers, and its warehouse solutions were limited to FBA. Now, by extending these channels or warehouses applicable to other platforms, such as TEMU, SHEIN, and independent online stores, Amazon is transforming some of its specialized solutions into omnichannel logistics solutions, expanding beyond its traditional FBA services to encompass the entire cross-border logistics and transportation process.
In reality, Amazon Supply Chain Services isn’t a brand new product. Rather, it connects various aspects and products of Amazon’s logistics services to provide a one-stop, end-to-end service. The launch of this service is both a response to current industry changes and challenges and meets the platform’s own development needs.
On the one hand, the uncertainty and complexity of the global supply chain, compounded by factors such as the pandemic, geopolitical factors, and rising transportation costs, pose significant risks and pressures to supply chain management. At the same time, with the proliferation of e-commerce platforms and the diversification of consumer demand, sellers must provide faster, higher-quality service across various sales channels and markets to attract more customers and revenue.
On the other hand, Supply Chain Services is a platform strategy. By providing one-stop supply chain services, Amazon opens up its logistics and data capabilities to sellers, enhancing the platform’s value and competitiveness. It also collects and analyzes more seller and consumer data, providing more opportunities and support for business development, achieving “both the best and the worst.”
In short, while Amazon’s launch of Supply Chain Services doesn’t offer full product management, it does reflect its growing awareness of emerging competitors like TEMU, SHEIN, and TikTok.
BaiXiao
· Amazon Logistics Enters a New Chapter, Competing with UPS, FedEx, and Others ·
Amazon Supply Chain Services demonstrates Amazon’s commitment to becoming a comprehensive third-party logistics provider, encompassing everything from factory shipments to last-mile delivery, from its own platform traffic to volume from other platforms and physical stores.
In recent years, Amazon has been continuously adding various services, distancing itself from carriers like FedEx and UPS in an effort to become a dominant logistics company, attempting to replace companies handling various aspects of shipping, customs, land transportation, and inventory storage with a single, seamless service.
In August, Amazon announced the relaunch of Amazon Shipping, a service designed to compete with package delivery giants like UPS and FedEx. Initially launched in 2018, the service focuses on building logistics capabilities from manufacturing to final delivery.
In addition, over 60% of sales in Amazon’s stores come from independent sellers. In 2022, US-based sellers sold over 4.1 billion items to customers worldwide, with an average sales volume of over $230,000 on Amazon’s stores. Through Amazon Transport and Logistics, Amazon is betting that these sellers are interested in using its delivery network to handle orders outside the Amazon ecosystem.
Jerry Hempstead, president of Orlando-based consulting firm Hempstead Consulting, stated that based on publicly available industry parcel data, UPS, FedEx, and USPS are losing market share in the US market. Amazon’s resumption of its transport and logistics services, which were suspended during the pandemic, will put additional pressure on competitors like FedEx and UPS. This also marks a new chapter for Amazon in the parcel shipping space.
With the launch of Supply Chain By Amazon, the restart of Amazon Shipping, and the earlier launch of Amazon Global Logistics (AGL), coupled with the aggressive construction of sorting centers, delivery stations, and logistics infrastructure in recent years, Amazon is steadily strengthening its self-built logistics empire, aiming to transport more packages and better control delivery times.
Amazon CEO Andy Jassy once stated that in just a few years, Amazon has doubled the size of its 25-year-old logistics center network. It has also built a last-mile delivery network comparable in scale to that of UPS.
With Amazon building its own logistics system, traditional express delivery companies like UPS and FedEx may face significant pressure. Since launching its own logistics system in 2018, Amazon has captured nearly one-fifth of the US e-commerce logistics market share in less than two years. According to the Pitney Bowes Parcel Shipping Index, Amazon’s US parcel volume market share increased to 22% in 2021, and in 2022, it handled 4.8 billion packages, surpassing FedEx.
Why has Amazon’s logistics business grown so rapidly? The primary reason is Amazon’s unique competitive advantages, including Prime, AWS, and its e-commerce business. These advantages allow Amazon to invest and compete in areas that express delivery companies like FedEx and UPS cannot reach.
Although building its own logistics system requires significant costs and time, in the long run, Amazon is providing better service with less capital investment. We are only in the early stages of Amazon’s logistics service evolution, and there are many more possibilities in the future.
Bai Xiao
· Will Amazon revolutionize freight forwarding companies? Amazon Deepens Its Depths in Supply Chain Management
Leveraging its platform’s inherent traffic advantage, Amazon’s launch of end-to-end supply chain management services demonstrates its pursuit of the upstream segment of the merchant supply chain—the manufacturer sector, a sector traditionally the exclusive domain of freight forwarders and third-party logistics companies. This move also vividly illustrates the shift in industry competition toward end-to-end solutions, with Amazon’s reach increasingly deep into every aspect of supply chain management.
Against this backdrop, industry insiders are beginning to speculate whether Amazon’s move will shake up the entire supply chain management market and impact freight forwarders, overseas warehouse operators, and other entities.
Amid the mixed bag of domestic freight forwarding, many sellers tend to choose official, reliable, and stable logistics channels. This is especially true given the recent spate of freight forwarder defaults, which have created significant risks in the delivery process. Reliability, stability, and timeliness have become common logistics requirements for sellers.
Amazon’s launch of end-to-end “full logistics management” for its supply chain is a brand new service offering for sellers. Discounts of up to 25% on cross-border logistics costs and potential savings of 51%-82% on AWD storage fees are undoubtedly highly attractive to sellers.
Source: Amazon Official Website
Previously, Amazon’s model required sellers to hire professional freight forwarders to handle the initial logistics, including customs clearance and shipment to FBA warehouses. Amazon then provided warehousing and storage services, and handled final delivery. Amazon has historically only handled warehousing and delivery, with freight forwarders previously dominating the remaining market share.
Now, end-to-end logistics supply chain management puts Amazon in direct competition with customs clearance, freight forwarding, cross-border transportation service providers, parcel carriers, and domestic third-party logistics providers. Amazon’s desire to capture a share of every link in the supply chain is undoubtedly a significant challenge for freight forwarders, which will have significant impacts on the freight forwarding industry and logistics companies.
Amazon has specifically stated that it has invested significant resources in the Amazon Supply Chain Service project, dedicated to accelerating the operation of its entire supply chain system and further improving automation. Leveraging data from the e-commerce platform, it will enable full tracking of global supply chain processes. If this service is tested and optimized by numerous sellers, it could have a significant impact on the cross-border e-commerce logistics industry.
However, it is probably premature to claim that Amazon Supply Chain Service will revolutionize first-leg freight forwarding, as some self-media outlets have claimed. Amazon Supply Chain Service is a disruptive and innovative service that will have a profound impact on the supply chain logistics of the cross-border e-commerce industry, presenting varying degrees of challenges and opportunities for freight forwarders and overseas warehouses. While it won’t completely replace them, freight forwarders still need to pay attention.
For example, for first-leg freight forwarders primarily serving overseas Amazon brand sellers, Amazon Supply Chain Service could pose significant competition. Backed by a strong business flow, Amazon Supply Chain Service can help simplify communication costs for overseas customers who rely on Amazon as their primary sales platform.
For first-leg freight forwarders with a diverse clientele and services, Amazon Supply Chain Service may pose some challenges and impacts, but these challenges will be relatively minor. These companies can still attract and retain customers by offering more value-added services, more flexible customization options, and a wider reach, while also expanding into other markets and channels.
Amazon Supply Chain Services is a service that freight forwarders need to adapt to and respond to. It can prompt freight forwarders to transform and innovate, providing more competitive and valuable services. While the future development and impact of Amazon Supply Chain Services remain to be seen and evaluated, it is certain that it will revolutionize supply chain logistics in the cross-border e-commerce industry.
Summary
The “full-management” model for cross-border e-commerce platforms and logistics continues to rise. Led by Amazon, it is likely that more and more e-commerce platforms will launch integrated end-to-end logistics services in the future. The omni-channel, cross-border retail model of cross-border e-commerce has taken shape, and logistics and distribution are also evolving into a global, omni-channel supply chain. This may further squeeze the survival space of small and medium-sized sellers and freight forwarders.
Since the emergence of the full-management model, different full-management platforms have been competing for resources, and the industry is undergoing continuous integration, both upstream and downstream, and domestically and internationally. How cross-border e-commerce logistics companies integrate global service levels with localized operational capabilities has become a dominant task. Further expanding the global service scope and improving the stability and sustainability of the supply chain system will also become long-term challenges!