Challenges Faced by Amazon in Managing Supply Chain for both Online and Offline Store

1. Amazon’s supply chain management is known as the most effective and efficient and plethora of multinational corporations follows Amazon’s strategies and their supply chain management in order to attain positive outcomes. Amazon is a behemoth player of e-commerce industry and it has set up its effective presence through Amazon Go in the offline market. Amazon is one of the largest retailers in the global retailing industry and their supply chain strategies are considered as the major factor for their success, growth and development. Amazon offers numerous delivery options to its customers and they have also introduced Amazon Prime services under which customers can subscribe for the Prime services on monthly or yearly basis. In that time period, customers are not required to pay extra amount for the fast delivery services. Their delivery options have helped the organization to make its distinctive image from its competitors and it has also helped the organization to develop brand loyalty amongst the target audience (McFarland, 2018).

Amazon’s CEO Jeff Bezos is one of the most efficient and effective leader of this era and with his unique leadership style, he has lifted Amazon towards the leading position in the global retailing industry. He always believes that quality is the major factor through which customers could be attracted and retained for longer period of time. In relation to this, organization has introduced their offline stores named Amazon Go to beat their local competitors such as small and mediums sized retailers. With regards to this, it is bit difficult for the organization to manage supply chain for both online as well as for offline stores (Amazon.com, 2018). In relevance to this, following challenges are faced by Amazon in relation to the supply chain in order to manage both online as well as offline channels:

• Inventory visibility: Inventory identification, management and tracking are key factors to attain success in the Omni-channel retailing. In terms of maintaining the efficiency of supply chain, organization is required to deal with inventory, location accuracy and visibility of suppliers in an effective manner. In online retailing, after placing order, organization takes appropriate time to pack the item and deliver it to the consumer while in the offline market, it is necessary to maintain safety level stock in order to satisfy consumers’ demands and wants.
• Streamlined operations:Online retailing is quite different from offline market because organization requires to maintain the stock level as per the latest trend in the offline retailing, although, it is also necessary for the online market also but organization have sufficient time to manage their processes (Galanton, 2017).
• Selection of vendor:Amazon believes in quality and products and services require going through various quality check processes. But it is very difficult for the organization check products’ quality in offline retailing (Christopher, 2016).

2. Amazon act as an agent between sellers and buyers and it operates in various parts of the globe. Organization has regularly expanded its functionalities by introducing new products and services. Recently, organization has entered into offline market by opening Amazon Go store with the objective of setting up its presence in the offline market (Govindan, Soleimani & Kannan, 2015). Although, Amazon’s online platform is considered as the most efficient due to its fast delivery options and wide product offering but due to growing offline retailing industry, organization has come up with its offline store. Amazon Go has been established with a unique business model which is highly efficient in managing both online as well as offline retailing functionalities of the organization. Supply chain management of Amazon is considered as one of the finest and most effective across the globe (Fernie & Sparks, 2014). Due to increasing competition in the offline retailing industry, Amazon has entered into grocery retail industry to compete with the existing players like Walmart, Target, etc. Following are several opportunities for the organization in relevance with performing as brick and mortar store:

• Expansion and growth: Amazon’s primary competitors in offline market are Target and Walmart as they have also established their online presence but their primary functionalities are rooted in the offline market. As Amazon does not have sufficient knowledge and experience of the offline market so, they have come up with a unique business model to set up its offline presence by opening Amazon Go in US. Organization is planning to expand its physical presence in other countries like UK and other developed countries. This store is an automated store which runs with an automated system. With very less number of employees, this is the first physical store in the global retailing market as customers just need to visit the store and pick up the items as per their requirements and pay with different online payment options such as mobile wallets, online banking, etc. Inventory is also managed by an automated system and vendors receive update with respect to the delivery of products to maintain the stock level (Monczka, Handfield, Giunipero & Patterson, 2015).
• Customer satisfaction:With the help of existing supply chain management, organization has attained appropriate customer satisfaction in the online industry, thus, there are high possibilities that organization would be able to retain its brand positioning through their physical stores as well. Apart from this, organizational USPs such as quality and customer centric approach will also help to attract its target audience towards their physical stores along with fulfilling their demands and wants to enhance customer satisfaction.
• Engaging with customers and suppliers:Amazon have developed good supplier relations by giving them business on regular basis and yet there is no physical interaction with the suppliers (Kache & Seuring, 2017). With the help of physical interaction, organization would be able to enhance supplier relationship through which attainment of sustainable growth and overall development of the organization in the offline market would become easy.

Opportunities for Amazon in Brick and Mortar Store

3. The step taken by Amazon to move in the offline market clearly shows that they do not want to be limited to the online industry only. The launch of Amazon Go and other physical elements of the organization clearly demonstrated organizational vision to become a large player of mixed online and offline retailing and manufacturing company. Thus, it could be said that yes, organization would be able to change the service benefits of their customers which they were gaining from the online retailing through their offline stores because their offline store is not similar to the existing players’ grocery stores. Amazon Go is an automated store where customers are not required to interact with the storekeepers to purchase the products (Zhong, Newman, Huang & Lan, 2016). Along with this, customers could shop and move forward to their homes without standing in the long billing ques as they could directly pay for their products through various digital payment options offered by the organization.

Amazon Go is getting positive response due to high brand image of Amazon in the e-commerce industry and their customer loyalty will also help to establish unique image in the global offline retailing industry. Organization will use the same approaches such as the supply chain system, customer centric approach and effective marketing strategies to build positive image amongst the customers for their offline store (Reefke & Sundaram, 2017). In the offline retailing industry, monopoly market conditions have been developed by Walmart and Target, thus, there is a big opportunity as well as a major challenge for the organization to compete with these behemoth brands and that too without any experience in the traditional retailing. But with the help of unique business model and huge brand image as the online retailer, organization would be able to compete with these companies along with gaining competitive edge over them (Hugos, 2018). Customer centric approach will be the powerful weapon for the organization to attract existing and potential customers of their competitors so as to move towards sustainable growth and overall development in the traditional retail industry.

References  

Amazon.com. (2018). Amazon Go. Retrieved from: https://www.amazon.com/b?ie=UTF8&node=16008589011

Christopher, M. (2016). Logistics & supply chain management. Pearson UK.

Fernie, J., & Sparks, L. (2014). Logistics and retail management: emerging issues and new challenges in the retail supply chain. Kogan page publishers.

Galanton, N. (2017). Challenges of Supply Chain Management. Economica, 3(101), 7-16.

Govindan, K., Soleimani, H., & Kannan, D. (2015). Reverse logistics and closed-loop supply chain: A comprehensive review to explore the future. European Journal of Operational Research, 240(3), 603-626.

Hugos, M. H. (2018). Essentials of supply chain management. John Wiley & Sons.

Kache, F., & Seuring, S. (2017). Challenges and opportunities of digital information at the intersection of Big Data Analytics and supply chain management. International Journal of Operations & Production Management, 37(1), 10-36.

McFarland, M. (2018). I spent 53 minutes in Amazon Go and saw the future of retail. Retrieved from: https://edition.cnn.com/2018/10/03/tech/amazon-go/index.html

Monczka, R. M., Handfield, R. B., Giunipero, L. C., & Patterson, J. L. (2015). Purchasing and supply chain management. Cengage Learning.

Reefke, H., & Sundaram, D. (2017). Key themes and research opportunities in sustainable supply chain management–identification and evaluation. Omega, 66, 195-211.

Zhong, R. Y., Newman, S. T., Huang, G. Q., & Lan, S. (2016). Big Data for supply chain management in the service and manufacturing sectors: Challenges, opportunities, and future perspectives. Computers & Industrial Engineering, 101, 572-591.