Amazon starts with the customer experience. And works backwards. That's what makes the Amazon supply chain successful.
You see, for Amazon, the focus isn't simply on moving items from a supplier to a distribution center to an address. As good as their process is, the company thinks bigger than Point A to Point B to Point C.
At Amazon, they are guided by the goal of delighting the person or company that purchased the item. The focus is squarely on delivering a customer experience that exceeds expectations.
Supply Chain for Amazon vs. Supply Chain for You
Maybe it sounds ridiculous to compare the supply chain of the retailer with the largest market capitalization in the world—over $800 billion when we last checked—with the supply chain of any other company. And, to be sure, Amazon can leverage dollars and unleash its massive scale like very few other corporations can. But let's look beyond the pure numbers and dig into the fundamental philosophy behind the supply chain operations at Amazon.
It's a customer journey.
Remember that Amazon wasn't always the behemoth it is today. Started by Jeff Bezos in the garage of his rented home and backed with a $250,000 investment from his parents, the company debuted as an online bookseller.
But even early on, before it began to expand at a breathtaking pace, it was the customer experience that would drive every innovation. When deciding to implement something new into the supply chain, the impact on the customer is the most important element.
Every part of the Amazon supply chain is designed and built to create an experience that brings buyers back. It's not just the speed of deliveries—now within an hour in certain large cities—but the ease of the entire buying process.
First impressions matter.
It starts on the site itself, where customers find a deep pool of information, reviews, and rankings. And while brand managers know that Amazon is not always a true meritocracy, it appears that way to site visitors. Products with both high demand and consistent inventories will gain the most prominent positions.
On the Amazon site, product information is comprehensive. Items that sell well don't skimp on photos, video, or detailed descriptions. Reviews are categorized so they're easy to parse. Comparable products and valuable accessories appear on the same page as the featured product.
Amazon aims to eliminate basic human errors by its customers, whether it's ordering the wrong size, not realizing how difficult a product may be for a DIY installation, or simply choosing something that will not meet the intended needs.
When customers receive a product, every step in the Amazon supply chain is designed to ensure it has the best possible chance of meeting expectations. After all, if it arrives and matches the ideas about it that the buyer had, a return is unlikely.
Returns are problematic for even the world's most sophisticated supply chain—avoiding them creates greater efficiency and keeps costs lower. Keeping them to a minimum is another part of what makes the Amazon supply chain successful.
In other words, Amazon brings efficiency to the supply chain before it even moves a product into what we consider the traditional supply chain. Making the site experience superior for its customers prevents snags after a purchase is made.
Interact with buyers.
Consistent interaction with buyers is another element that explains why the Amazon supply chain is successful.
Once someone buys an item on Amazon, the customer experience really kicks into high gear. Automated updates immediately follow. When it's going to arrive is the initial piece of information, but there is never a moment when a buyer is left in the dark. The customer journey is seamless, and buyers are free to look forward to the arrival of a package instead of wonder when their order will actually arrive.
What does the Amazon supply chain mean for small business?
Small businesses might not think there is much to learn about supply chain management from an organization as large and well-funded as Amazon. But any company that sells goods and any supply chain manager can find strategies to emulate in the Amazon supply chain.
For starters, take a fresh look at what is usually the first step in the process—your own eCommerce store, and your product presentations on Amazon or other online marketplaces. Is the copy descriptive, accurate and, perhaps most importantly, easy to understand? Have you provided as many product details as possible—dimensions, colors, unusual features or sizing? Do you show all reviews to help buyers make the right choices?
Some companies worry negative reviews will deter shoppers, but remember that most consumers are savvy enough see when someone is being unfair. And if a review prevents a person from buying your product, it may be for good reason. If your item ends up disappointing them—and even a product of the highest quality is disappointing if it doesn't match the intended purpose—you'll end up dealing with the return process.
Remember—an efficient supply chain avoids issues like returns as much as possible.
Shipping in your supply chain.
Next, make your own shipping process seamless, and integrated into the system that powers your business. Your EDI and order processing software should provide direct connections to your shipping providers to eliminate the need to manually transfer information. No matter which company you rely on for shipping—UPS, FedEx, USPS, ShipStation, or a smaller or specialized provider—an automated approach will nearly eliminate errors.
Shipping is critical when it comes to the customer experience your supply chain delivers. Ensure that you communicate with buyers to let them know when a product has shipped, and provide tracking information. This is no longer simply a nice feature to offer. It's mandatory because it has become an expectation in the world of digital commerce, and you shouldn't work with a shipping provider that can't deliver it.
After the delivery.
Once your item is delivered successfully, don't miss an opportunity to enhance the customer experience further. An automated email that makes it easy for the buyer to provide feedback creates goodwill and can give you valuable insight for future improvement on everything from your supply chain to your product offering. It's also a chance to offer a discount or special offer on future purchases, and turn shoppers into long-term customers and fans of your brand.
In other words, if you've invested effort in a supply chain that delivers a customer experience similar to the one Amazon provides, don't be afraid to reap the reward. Chances are, you have a very satisfied customer who is likely to buy from you again or tell a friend about your brand. Don't waste this opportunity—you've earned it.
Add convenience, satisfy consumers, keep improving.
If you're making the customer experience the focus of your supply chain, you're always looking for ways to improve. Maybe you can't build a high-tech fulfillment center—or build hundreds of high-tech fulfillment centers around the world, or start your own fleet, or what the heck, launch an airline—but you can make sure your 3PL provider is a good match and a valued partner.
You can also choose the right software for both EDI and direct-to-consumer order processing. Make sure your selection can scale with you as your business grows, and can be easily integrated with other elements of your business. The more automation you can create, the more your supply chain resembles the one we all know from Amazon.
Whether you see Amazon as a tough competitor, a valuable ally, or a frenemy, it would be foolish to ignore their focus on customer experience and the supply chain. Study it, and make sure yours does as much to delight the people who buy your products.
“There’s no question that it’s an exciting time in supply chain management. There’s also no question but that supply chains have to make the leap from being focused on cost to, like Amazon, being totally focused on the customer.” —Bob Trebilcock, Supply Chain 24/7