Amazon has launched Amazon Supply Chain Services that unlocks its full end-to-end logistic network—offering freight, distribution, fulfillment and parcel shipping services—to businesses of every type and size beyond its marketplace sellers.
“Amazon is bringing the infrastructure, intelligence, and scale of its supply chain services—proven over decades—to businesses everywhere, much like Amazon Web Services did for cloud computing,” said Peter Larsen, vice president of Amazon Supply Chain Services.
Courtesy of Amazon
With ASCS, businesses of all kinds can transport raw materials, ship inventory by air, sea, and land, store and manage goods closer to customers, and deliver orders across sales channels through Amazon’s seven-day-a-week parcel service.
ASCS promises “One network to move store and deliver goods for every business,” with customers able to select one, some or all of its capabilities to fit their needs.
Early adopters of ASCS include Procter & Gamble for shipping raw materials and finished goods, 3M for freight delivery across its global distribution centers, Lands’ End to manage inventory and omnichannel order fulfillment and American Eagle Outfitters for parcel delivery of customer orders from its American Eagle and Aerie websites.
Following the AWS playbook—building its cloud computing infrastructure to support its internal needs, then releasing it to the wider market—Amazon is opening its logistics network to businesses outside its marketplace ecosystem. Amazon vice president of ASCS explained its logistics network— “proven over decades”— is ready to deliver the “same cost efficiency, reliability and speed” once reserved for Amazon’s operations to retailers, manufacturers, wholesalers and industries from healthcare to consumer goods. This move positions Amazon as a potential disrupter of legacy logistics providers, such as UPS, FedEx and DHL. It brings a next-generation, custom-built supply chain system that helped propel it to the world’s largest e-commerce retail company into a logistics market dominated by established companies built for only parts of the supply chain and that lack Amazon’s systemwide visibility.
80 billion items shipped by marketplace sellers via Fulfillment by Amazon service since 2006.
“The latest logistics play is the Amazon flywheel in action: the business is using infrastructure it built for its own core operations and is selling it as a service to others. The B2B play is interesting as, generally, it has better margins than B2C logistics. And, of course, it links to Amazon’s desire to attract B2B sellers to its own platform. Amazon will take some share from existing logistics providers in this space. However, it won’t immediately dislodge everyone else as the market is huge and a lot of relationships are very specific and embedded. But it is distinctly unhelpful for others in the space,” shared Neil Saunders, GlobalData.
Retail industry analyst Howard Lake sees numerous brands and retailers “highly tempted” to sign onto ASCS because it is more attuned to the specific needs of the retail industry compared to other logistics providers. But he warns retailers to carefully consider the risks. “Amazon may be a supplier, but it’s also a rival marketplace operator, a rival advertising platform and a data-rich rival retailer business that only ever seems to want to conquer more and more channels—ask anyone in the book trade or consumer electronics about that,” he wrote on Substack.
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