Breaking News! – Amazon’s Getting Into the 3PL Business
Is This the Answer to Amazon's Inventory Limit Roulette? - PLUS, the Latest on the Electric Vehicle War Between Amazon and Walmart
For entrepreneurs, the last 24 months have been full of challenges. Between the supply chain disruptions and Amazon’s constantly evolving inventory storage limits, it’s been a wild ride. Making sure that you’re able to have ready access to the stock you need to fulfill customer orders hasn’t been easy.
That’s why e-commerce strategists pay so much attention to what’s referred to as the “last mile” of fulfillment. According to BI Intelligence, shipping charges for the last mile equate to 53 percent of the total delivery cost.
Increasingly, Amazon sellers are turning to 3PL (or, Third Party Logistics) companies to help them accomplish this task.
A 3PL handles a businesses logistical needs and supply chain operations. Among the services that they provide are inventory receiving, product inspection, warehousing and storage, inventory management, assembling orders, and handling returns.
Many e-commerce sellers have made arrangements for a “Plan B” fulfillment option. While there’s probably nothing you can do to eliminate every component of global supply chain disruption. Working closely with your suppliers, cultivating an affiliation with a third party logistics company, and keeping a very close eye on your inventory management are great first steps.
During times of uncertainty, when it involves the Amazon marketplace, the more options the better.
Of course, Amazon and Walmart have also focused their attention on strategies to address supply chain disruptions, particularly concerning “last mile” delivery.
That brings us to . . .
Amazon and Walmart’s Electric Vehicle Wars
Like interstellar entities spinning towards a black hole, EV manufacturers are being sucked into the continued struggle between Amazon and Walmart. In the ongoing effort to balance sustainability and logistics, electric vehicles (EV) manufacturers have become an important lever.
Recently, it was revealed that electric vehicle startup Canoo was barred from entering into a deal with Amazon. This was part of its agreement with Walmart to supply approximately 4,500 EVs.
Alternately, EV manufacturer Rivian launched its first vehicle, the R1T electric truck last year. Since then it’s been scaling up its production in order to fulfill the promised delivery of 100,000 custom-built electric delivery vans ordered by Amazon as part of its move to electrify its last-mile fleet by 2040. Rivian began this project with a major investment of $700 million from Amazon in 2019.
Amazon is Making the Move Into Third Party Logistics
There are more than a few Amazon sellers who might find it ironic that the same company that has recently been so aggressive about restricting inventory is now in the business of offering a surplus inventory option.
For now, I’m going to leave that question alone.
However, one of Amazon’s planned revelations during their upcoming Amazon Accelerate annual seller conference taking place September 14-15, is for a new Amazon-designed 3PL platform called AWD.
According to the e-commerce giant, Amazon Warehousing & Distribution (AWD) is “a new solution that enables sellers to use new, purpose-built facilities for bulk inventory storage and automated distribution.” AWD intends to “address critical supply chain challenges and helps sellers grow and manage their business while significantly cutting costs.”
It would seem that it’ll also round up a little of the cash that’s been leaking out between Amazon’s fingers and into the rapidly growing 3PL industry.
Amazon goes on to say that their “simple pay-as-you-go service frees sellers from the time-consuming, cumbersome process of moving inventory from upstream facilities to Amazon fulfillment centers.”
How to Get Started with Amazon Warehousing & Distribution
Amazon promises that enrollment will be, “easy.”
Following that, Amazon says that sellers can:
- With one click, send their inventory to Amazon Distribution Centers
- Integrate their upstream inventory storage operations with the Amazon Fulfillment Network
- Consolidate their global inventory, which they can then view and manage on Seller Central
- (In 2023) Use AWD to send their inventory to any location, including to wholesale customers or brick-and-mortar stores
That’s great for Amazon, but how should Amazon sellers continue to prepare for the hiccups that accompany e-commerce supply chains?
Here are a few strategies that you might want to consider.
How Should Amazon Sellers Modernize Their Supply Chains In 2022?
Wondering what to advise your children to pursue in college? Every successful SaaS (Software as a Service) company is looking for data experts. These days, big data, artificial intelligence, advanced supply chain, and inventory management software are all featured topics at the most influential e-commerce conferences.
Big Data, Data Science, and Data Analytics
These emerging technologies continue to help Amazon sellers to uncover insights and modernize their supply chain management. Among the ways that data analytics can help e-commerce sellers are through quality control, analysis of weather patterns, cash flow management, and predictive strategies.
Artificial Intelligence and Machine Learning
Artificial intelligence involves computer systems that can mimic human intelligence. Machine learning is a field of study that uses computers to make predictions. Using historical data, they can even make decisions without human coaching or oversight.
AI and machine learning can help Amazon sellers develop automated processes that use predictive modeling to help make critical decisions including inventory management and shipping logistics.
Supply Chain Management Software
Many of the top e-commerce SaaS companies have recently developed and launched their own proprietary supply chain management software. Helium 10 has Inventory Management. JungleScout has Inventory Manager. Both of them claim to take a data-driven approach to help e-commerce sellers with their Amazon inventory management.
The idea is to create an algorithm that enables sellers to customize their own supply chain models. That results in the ability to adjust lead times and reorder frequencies to sync with the Amazon supply chain model. With a better understanding of a supplier’s shipment speeds, forecasting becomes much less of a guessing game.
I think we all are starting to realize that navigating e-commerce supply chain challenges is going to become an ongoing part of running an Amazon business. Taking these few simple steps will go a long way towards making sure that the next one isn’t a huge bump in the road. Instead, by following these suggestions, you’ll be able to level up and distance yourself from those who weren’t ready.
How Canopy Management Can Help
Canopy Management is a full-service marketing agency for Amazon and Walmart sellers. Our team consists of former Amazonians, multi-million dollar sellers, and award-winning experts. When you consider the many ways that Canopy Management can help you grow your business, you’ll see why selling on Amazon is much easier “under the Canopy”:
- Strategic Growth Planning
- Listing Copywriting Optimization
- Listing Photography
- Product Videography
- Advertising Management
- Customer Service
- Demand Side Platform (Amazon DSP)
- Amazon Posts
- Full Service Management
- Amazon Review Aggregation