Friend or Foe: Where Does Amazon Fit into Your Supply Chain?

What started as a small online bookstore in 1995 is now the world’s largest online retailer with a better selection than most brick-and-mortar department stores. The internet giant continues to grow and expand, now offering commercial materials for various industries through AmazonSupply. Amazon has gained a strategic position in the global supply chain and continues to influence the way people do business.

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Amazon the Competitor

Amazon has changed the way consumers shop and continuously broadens their range of offerings. From electronics and digital merchandise to furniture and brand name apparel, Amazon is a leading competitor for many retailers. Plans for a physical Amazon store will raise the bar even higher. With the launch of AmazonSupply, business-to-business retailers are feeling the Amazon effect as well.

Amazon the Sales Outlet

According to Forrester Research, “For many businesses, Amazon is simultaneously a sales channel, a potential service provider, and a competitive threat.” Amazon runs the online shopping sites for several major retailers including Sears Canada, Timex, and Lacoste, while many small retailers use the Amazon platform to reach a wider market. Suppliers also have a place in Amazon’s lengthy supply chain, although “being an Amazon supplier comes with a financial working capital burden,” according to Bob Ferrari, citing an average payment window of 76 days.

Amazon the Vendor

A steadily growing number of business owners are turning to Amazon for their supply needs. Quick, low-cost shipping is a big plus, especially for small and medium enterprises. Other features, such as scheduled shipments for repeat purchases, add to the appeal. AmazonSupply’s product lineup includes more specialized equipment, such as lab & scientific materials, hydraulics, pneumatics, and power tools. The mega-site also offers web services, cloud solutions, advertising opportunities, and other tools for business owners.

If Amazon doesn’t already have a place in your supply chain, it’s time to consider the effects this cross-industry giant could have on your profits. Amazon is a competitor, a supplier, and an essential service provider, sometimes all at the same time. However, it is also a beneficial supply chain partner with the right strategy. [/show_to]