Amazon has evolved over the decades. Once, it was simply an algorithm-using online book store. Now, it is a global omni-commerce juggernaut. Such success can be attributed to several factors. However, it is the seamless and interwoven functions of those factors that allow Amazon to excel as a global retailer. More specifically, it is in Amazon’s warehouses that those factors come together.
Amazon has warehouse locations in all but five states, and those warehouses are full of data-driven AI, robotics, and advanced software. These warehouses are the core of the business in many ways, but they also showcase the steps that many retailers can utilize to take advantage of the same resources. From a tiny drop-shipper to a successful chain of e-commerce stores, Amazon is a prime source of firsthand, global retail lessons.
For any e-commerce retailer, Amazon represents a prime resource of information. The retail giant has thrived on its adoption of data science and an agile business model. In a world of uncertainty, Amazon has secured its position as a top retailer. Still, what exactly did it do to achieve this?
In short:
- Amazon capitalized on customer shopping habits and data to create to-the-second pricing and inventory updating.
- Amazon offers two and one-day shipping that is rarely late.
- Amazon integrates with suppliers, manufacturers, and other retailers to expand its offerings and connect entire supply chains.
E-commerce retailers of any size can benefit from these same strategies. Understanding customers is a crucial goal of any retailer, and the ability to track their shopping habits allows that retailer to target goods and services across its pool of patrons.
Amazon’s vast warehouse network is another critical aspect of its success. Few retailers can hope to come close to such a massive system of over 300 million square feet of warehouse space. However, any retailer can use similar warehousing tactics in their current inventory configuration.
Real-time item tracking and strategic warehouse locations aren’t just tactics for the megacorps. Small satellite warehouse locations can cut down shipping times. And item tracking creates an extra level of customer involvement and satisfaction.
As well, retailers can look at Amazon’s spending to understand the weight that Amazon places on its functions. In 2020, Amazon spent almost $40 billion more on shipping costs than the previous year. It spends over $76 billion a year on shipping costs, such as item sorting and transportation.
The lesson here is that any e-commerce retailer that isn’t focusing on shipping fulfillment is potentially losing out on profits.
Amazon’s status as a retail juggernaut is bolstered by its shipping policies. It was one of the first major retailers to offer two-day shipping. Since then, it has rolled out next-day shipping.
Recently, Amazon revealed a new warehouse strategy: suburban areas. Thousands of warehouses are planned in neighborhoods across the country. This will ensure the fastest shipping speeds for its customers, while preventing unforeseen obstacles from interfering with the shipping process.
However, customers don’t always need or want next-day shipping, especially if it comes with a higher fee. Having shipping choices like Amazon allows various decisions for the customer. No matter the size of the business, multiple shipping options place the shipping choices within the hands of the customer. For many, this is more desirable than speedy delivery.
Of course, shipping fulfillment is one of the most important aspects of any e-commerce retailer, and customer choice in this area is essential. If customers don’t receive their goods on time, though, their choices mean nothing. Eventually, customers will find other retailers who provide stable shipping choices.
These days, customers look for omnichannel experiences. Ordinary shopping trips now incorporate seamless transitions from mobile browsing to e-commerce shopping. BOPIS (buy online, pick-up in store) systems further integrate traditional and e-commerce options.
Still, an issue at one location of a supply chain can have a staggering impact throughout the entire length of the chain. From component shortages to labor strikes, plenty of factors can interfere with your business.
Amazon has tackled such issues through extensive supply chain management. Amazon can create real-time, virtual representations of entire supply chains. In other words, every resource can be tracked and visualized.
If that seems a bit beyond the normal scope, consider the following:
- Item tracking allows a business and customers real-time location updates.
- Real-time inventory and supply tracking can reduce needed on-hand inventory.
- Machine learning can scour a business’ data to increase productivity, streamline bulky processes, and ultimately enhance the customer experience.
Smaller e-commerce brands can use similar programs and applications even without advanced AI and legions of computer geniuses. Virtual supply chain management delivers the data needed to anticipate and prepare.
It’s understood that few can ever hope to top Amazon, but the retail giant remains a key source of information for the rest of the retail world. Amazon and its warehouse network create a framework to measure a retailer.
Customers of the day want easy shopping options from anywhere and controllable shipping choices. Amazon has achieved these goals through its advanced warehouses and keen insight into every facet of the retail industry.
Warehouses in every state aren’t realistic for every retailer. However, Amazon’s ongoing construction of warehouses highlights some important factors—specifically, shipping stability and customer experience. Without marked improvement of those factors, retailers have a limited future in the world of tomorrow.
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