Amazon.com : Web Retailer or Logistics Provider ?

young lady use cellphone order online shopping product from amazon prime

First things first, though, what is Amazon.com? “Amazon.com”  is an American electronic commerce and cloud computing company with headquarters in Seattle, Washington. It is the largest Internet-based retailer in the United States.” It is also “the world’s largest provider of cloud infrastructure services (IaaS)”. Amazon Business, on the other hand, previously known as AmazonSupply since 2012, is a web based wholesaler and distributor that addresses the needs of businesses of all sizes. With that, the fact that it carries out cargo transport services of all sizes that are detailed coordinations of complex operations involving many well-trained staff, facilities, or supply in order to move one thing to another to satisfy the customer, it has to be logistics service provider as well.

     Whatever the case, at the tip of the iceberg, it’s an internet retailer and a Cloud service provider. Yet, in 2015,“it surpassed Walmart as the most valuable retailer in the United States by market capitalization”. How could that be, since Walmart has ruled as the dominating American multinational retail corporation for ages? For one thing, it could mean that the type and amounts of products people are willing to purchase online is exceeding that of what they have to make a trip in to Walmart for, coupled with a shift in consumption behavior pattern, switching from buying the same types of products from Walmart, to Amazon. Or, it could mean that Amazon has a better business concept. 

     How does Amazon differ from its competitors? That depends on what business category we’re looking at. The differentiation could get increasingly vague as we confuse over retail/wholesale, inventory, storage, distribution, and cargo transport business concepts and start using the terms interchangeably, without even getting into the web-based, cloud computing, and robotics side of it. Or, maybe that’s exactly the terms we need to understand how Amazon works – it’s all of the above made not only possible but super efficient by integrating the concepts. As Microeconomics has it, Vertical Integration is “an arrangement in which the supply chain of a company is owned by that company”. A synchronized integration managed with cloud computing? Maybe. Taking a look at where the largest bucks are made, it’s not from shipping single umbrellas to individual customers, “it’s in cloud computing. It’s these vast servers”, says Bruce Cohen, a senior partner at management consultancy Kurt Salmon.  Without the Cloud canopy, perhaps it would be impossible to orchestrate the otherwise isolated concepts in any meaningful manner. With it though, Amazon is apparently able juggle multiple tasks with more than two hands, across several hands, as all of them are governed by the same, one, overarching brain, more or less, in an Internet of Things (IoT) manner.

Key qualities that optimizes Amazon processies:

  1. Overarching cloud computing
  2. Highly trained workers
  3. Converged inventory, warehouse, and distribution concepts, into a fulfillment center concept that strategically located in close proximity to key geographical transporting stations and airports
  4. Synchronized cutting edge technology embedded in each and every operating facility 
  5. A one-stop service provider for third party businesses of all sizes,from sales to after sales services, as well
  6. A leader in human-robotic symbiosis development

     A cloud computingthat synchronizes everything is key to Amazon’s amazing turnaround time. But that’s not the end of it. Amazon stores third party company products for them for the purpose of effective storage and distribution and allows them to list their products on Amazon.com, where all of a sudden – they have a retail page on one of the most popular web-based retailer in the world. With good customer feedback ratings and history, business from the web is very promising. If Amazon doesn’t sell it itself, it still does very well from the entire sales process, from the purchasing through its website, inventory and distribution system, to delivery and even after sales services where both customers and producers engage and handle issues through the web portal and gain points for free future shipping credits. In other words, even if Amazon doesn’t retail anything, it still benefits from its fine tunedly crafted platform that allows producers to focus on producing, customers on shopping, and take care of everything else for them, from digital marketing and sales, to warehousing, inventorying, and distribution, and does so in an extremely efficient manner. So efficient that any producer or trader, small to large, would be better off leaving the tasks for Amazon to handle, than do it themselves, or, risks incurring considerable operational costs and marketing expenses, let alone the opportunity cost of customers not finding it Amazon.com. Despite the official business category listing, what Amazon offers is the ultimate platform for anyone and everyone to conduct business.

     So, does a freight service provider have to become all of the above to stay ahead of the game? In the US, there sure is an example suggesting so. If affordable to do so, why not. Becoming an internet retailer and a cloud service provider sure looks like a lot less money well spent in comparison with the lucrative robotics side of the game. Amazon would probably still be the prototype of tomorrow’s logistics even if robotics were only used to perform simple repetitive tasks, or reduced to the simplest of functions. Perhaps less promising in locations where labor cost is not yet a factor, however, as robots use to be incapable of manipulating and improvising, they were never designed to collaborate with human workers. Until 2012, after adding Kiva Systems to its existing supply chain, advanced computer chips, computing algorithms, sensors, and actuators, made robots cheaper to make, safer to use, better collaborates with humans, and now Amazon has entire facilities designed around human-robotic collaborative applications. Per Amazon spokeswoman Kelly Cheeseman, the amazing thing about human-machine symbiosis is that it’s “a symphony of software, machine learning, computer algorithms, and people,”, “and the people are such an important component; the technology wouldn’t mean anything if you didn’t have great employees that help interact and engage with it.” That said, though, “…….with humans and machines working in carefully coordinated harmony. Besides showing the incredible efficiencies of Amazon’s operations, the factory hints at how, over the coming decades, technology may start to assist human workers with many simple manual tasks. How far this change goes, and how quickly it comes about, could make a significant difference to the labor market” says TechnologyReview.com. 

     A present day IoT leading to a Zero Marginal Cost Society and Prosumers? It sure looks like we’re walking the line already without even noticing it. The third industrial revolution is quite a gradual one, just like its predecessors.

Compiled by BLOG.SCGLogistics

References: technologyreview.com/news,forbes.com, wikipedia.org

Picture Source :  businessweek.com, wired.com

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