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After spending nearly three decades assembling, perfecting and honing its own logistics network, Amazon is now opening it up to companies that want to use the established infrastructure to get their own products to market. The news shook the logistics and fulfillment markets a bit, as experts assessed the short- and long-term impacts of Amazon Supply Chain Services (ASCS) on the logistics sector.
According to Amazon, the company is opening its full portfolio of freight, distribution, fulfillment and parcel shipping capabilities to businesses of all types and sizes. Its goal is to expand its third-party logistics (3PL) capacity to support businesses in the healthcare, automotive, manufacturing, retail and other sectors.
“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 ASCS VP Peter Larsen, in the company’s announcement. “…with the launch of ASCS, we’re confident we can give any other business access to the same cost efficiency, reliability, and speed that we’ve built for Amazon customers.”
Taking the Next Step
Amazon says independent sellers have shipped more than 80 billion units with Fulfillment by Amazon (FBA) since 2006. In most cases, those sellers were happy to offload the picking, packing, shipping and returns processes to the e-tailer. The company slowly added new services and capabilities that over time became a “fully automated set of services that move sellers’ products from factory to customers’ doorstep through a single network,” it says.
“Today, Amazon supports hundreds of thousands of sellers, moving billions of items worldwide annually. Sellers using these end-to-end solutions see nearly 20% higher sales,” Amazon adds. Now, the company is going a step further and making individual logistics services available for all types of retail, wholesale and commercial businesses.
Some of the companies already using ASCS include:
- Procter & Gamble, which is using Amazon’s freight services to transport raw materials to production facilities and move finished goods across its distribution network.
- 3M, which uses the company’s freight services to move products from its manufacturing sites to distribution centers worldwide.
- Lands’ End, which is using a unified inventory pool within Amazon’s network to fulfill orders across multiple sales channels.
- American Eagle Outfitters, which uses the company’s parcel shipping network to deliver online orders from its American Eagle and Aerie websites directly to customers.
“Amazon is one of our key ecommerce partners, and we’re excited to leverage Amazon Supply Chain Services to position inventory closer to customers so we can reach them even faster,” said Andrew McLean, CEO of Lands’ End, in Amazon’s announcement. “This consistency is central to our solutions-based approach, enabling us to serve customers with confidence and agility, especially during peak seasons.”
Industry Impacts and Implications
Reuters says Amazon’s latest move could position it as a major player in the U.S. logistics industry. The company has a fleet of more than 100 cargo planes (behind only FedEx and UPS) along with a large network of warehouses and sorting hubs.
“It would also help Amazon unlock a new growth opportunity for its e-commerce unit,” Reuters says, “building on a service that already supports thousands of independent third-party sellers on the platform worldwide.”
The launch will likely turn Amazon’s logistics strength into a broader business service, much like the aforementioned Amazon Web Services (AWS) did for cloud computing. “That means companies that already struggle with fragmented supply chains may now have another large-scale option for sourcing, storing, and shipping goods,” Global Training Center says.
“For businesses, the appeal is simple: fewer supply chain handoffs, better tracking, and access to Amazon’s scale,” it adds. “For the market, it adds more competition to third-party logistics providers and could push other players to improve speed and reliability.”
