Amazon: The Supply-chain Innovator
Amazon (amazon.co.uk) has been an innovator in all things supply chain.
From automating the majority of warehouse processes to delivery drones, the company is setting a high benchmark for both e-commerce and supply chain platforms.
Amazon’s moved from sector to sector and transformed the buying process, even if that meant tearing down its own existing structure and systems.
They go above and beyond when it comes to expanding their network and attracting more customer reach.
Amazon is a data-driven company that focuses on delivering a quick and easy to use middleman that prides itself on great customer service.
In other words, they’ve been able to reinvent the wheel while keeping customers happy using two selling points. One, everyone wants a good deal and two, they want it as quickly as possible.
Following this logic, they’ve developed a platform that services specific customers in the best and fastest way possible.
Their approach to market greatly differs when compared to the likes of Apple, Google and Microsoft, who operate on a tightly premeditated network of interconnecting apps and services.
How well are they doing? Well, apart from the fact Bezos is see-sawing with Gates for the richest man in the world, the e-commerce company announced in June they would purchase Whole Foods Market Inc. for $13.7 billion.
They quickly realised thereafter that online purchases of fresh produce is hard to sell online.
Enter a new idea.
The Next Leap: Instant Pick-Up
Launched only a few weeks ago, Amazon’s innovative instant pickup service hones in on convenience and speed of delivery.
All in all, Instant Pickup enables Prime Members and Students to acquire essential items ordered online within two minutes of clicking the ‘buy’ button.
Amazon’s built a system that is redefining the concept of speedy delivery by setting some of the fastest turnaround rates known in today’s supply-chain.
By re-developing the pickup service from their earlier attempts, customers can enter staffed offices to deal with and pick up their orders.
So what are the main reasons for Instant Pickup?
- It targets a lagged market segment: impulsive buyers. Bezos found neighbouring ecosystems that have been grown organically, rather than planned from the top-down, a more effective avenue for his behemoth of a business.
- Consumers now can pick up specific items within two minutes or less of purchase, enabling a supply chain service not even closely offered by the extant competition.
- This service enables Amazon to further develop quick turnarounds with selected products or even perishable goods. Their acquisition of Whole Foods is starting to make sense.
Jeff Bezos mentioned that “Our customers are loyal to us right up until the second somebody offers them a better service, and I love that. it’s super-motivating for us.” So as Instant Pickup grows, companies like Best Buy and Staples could be in for a not-so-nice surprise.
This step permits Amazon to provide a better channel to students for cheap electronic devices or university supplies, delivered straight to university campuses.
Why? They want to be included in the daily buying process and replace corner shops.
Not only, this strategic move will likely leave big-box retailers in the dust because their models do not permit them to create a competing or even compelling offer.
Checkers are flying off the table. The barriers to entry such a step creates against competing companies, be it a corner shop or even Staples, is immeasurable.
Enough Chitchat. Where Can I Use Instant Pickup?
Unfortunately, it’s only being rolled out in the US. The service is up and running across five college campuses alongside the already 22 manned pickup locations on or near university campuses in the country.
So where are they currently expanding?
- Los Angeles, California
- Atlanta, Georgia
- Berkeley, California
- Columbus, Ohio
- College Park, Maryland
Amazon has its sights sets on neighbourhoods with the aim of connecting users in local communities by blurring the lines of what seems to be a local, national or even international purchase.
Take about progress? A website that used to sell books online now enables people to set up a storefront to sell pretty much anything under the sun.
A perfect partner to Prime:
Amazon Prime accounts for 60% of the total value of all the stock traded on site. Not only, almost every service offered by the company has some connection to Prime.
Each Prime member in the US, on average, spends about £1950 annually. Given that there are 40 to 50 million people in the US alone using Prime, it puts Amazon in a unique position.
This is because Prime members often spend four times more than their non-member counterparts.
So what are the implications for Instant Pickup? The more Amazon is able to roll it out, the more of the market they will be able to captivate.
Competitors simply do not offer the same reach, speed of delivery or pricing.
Alongside their regular users, Instant Pickup’s primary target market are students.
Why? They’re trying to entice customers to use their platform for buying daily essentials and perishables, alongside their nominal offers.
In doing so, Amazon aims to shift consumer-buying habits from ordinary convenience stores to instead embrace their concept of online shopping.
What makes it different? They’re merging their online strategy with the benefits of offline shopping to include touch, feel and immediate availability to the online buyers journey.
Instant Pickup will aim to attract laggard customers who normally shop at brick and mortar stores. This is due to their offline shopping expectations and immediate buyer needs, making for a profitable punch.
It’s a stunningly powerful combination, especially after their recent acquisition of Whole Foods.
Good Amazon. Bad Amazon?
The masterpiece of Amazon is redefining what digital commerce is today. In turn, they’re profoundly restructuring the way we do business both on and offline.
Amazon consistently aims to recreate our expectations and therein it’s own offering and model.
A study conducted by the Institute for Local Self-Reliance of 3,000 independent businesses (of which half are retailers) showed that the biggest threat they face is Amazon.
What’s the price of such driven innovation? The same study showed that in 2015 alone, there was a net loss of 149,000 jobs across all businesses based in the US.
Some are even comparing the Instant Pickup service as a competitor to vending machines, alongside the already mentioned convenience stores.
One of the key pros offline stores have over online competitors is the ability to serve consumers instantly, with zero downtime for waiting.
They don’t stop there. Amazon is looking to further bridge the gap between online and offline purchasing.
Of course, given that you can order online and the general offering created by Amazon doesn’t even compare, they’re definitely making strides into markets most wouldn’t even recognise as an opportunity.
Food for thought:
Estimates predict that one- fifth of the US’s $3.6 trillion retail market will have shifted online in five years. Amazon is positioned to seize two-thirds of that share.
All in all, do we think Amazon is good or bad? Well, this boils down to a few considerations.
Yes, as a company they’re eliminating a large section of online and offline business for local or even national providers.
On the other hand, Bezos has created a service at a price that no one else can provide due to Amazons outstanding reach and perpetually innovative offering.
Order on the go, get pretty much anything you want and depending where you’re situated, you can get it delivered to you on the day or you can go pick up your purchase in minutes.
Who wouldn’t want to use Amazon? There is no other e-commerce platform that can give you the same breadth of products or quality of service.
Want to be more like Amazon and create a remarkable supply-chain?