Supply Chain By Amazon Launches: Be Afraid, Be Very Afraid
Supply Chain by Amazon (SCA) SCA is a mix of old and new. The scope of the release is end to end, from manufacturing to customers. Let's be clear: this is more about the ultimate go-to-market manifestation of Amazon's global logistics ambitions. In other words, AWS meets Logistics.
What Are The Key Objectives of SCA?
1 - Keep products in stock.
2 - Ship faster and more reliably
3 - Significantly lower costs.
This is the Holy Trinity of logistics (pretty much always), and all critically important priorities for all brands. Bravo for crystallizing this. 📣 Especially at this moment, this message is literally pitch-perfect from what I am hearing from my own clients and industry experts that I trust.
What's the Historical Context of SCA?
FBA 70% less expensive than other fulfillment.
Need to solve beyond fulfillment, hence SCA.
What Are the Core Capabilities of SCA?
First mile pickup from manufacturing (Amazon Global Logistics (AGL))
Cross-border shipping and customs clearance (Amazon Global Logistics (AGL))
Warehouse bulk inventory (Amazon Warehousing and Distribution (AWD))
Manage automatic replenishment to Amazon + Retail (AWD into FBA or MCF or Retail)
A new Preferred Carrier Partner program for domestic goods bound for AWD, with 25% discounts.
Multichannel Distribution moves products in bulk from AWD to fill and replenish inventory to any sales channel (MCD). Pilot now, launch later.
I've called out the acronyms that I have seen Amazon use for these services in the past.
What Additional Benefits Does SCA Offer?
Discounts of 25% for all transportation bound for AWD, either via AGL or Amazon Partnered Carrier Programme (PCP).
AWD removes peak pricing in Q4, pricing model changes to commit to longer-term storage for even lower rates. Sounds like AWS pricing to me. Not an accident. This was completely inevitable!
What's the Key to Success for SCA?
First, the discounts for freight/parcels bound for Amazon facilities is a nice touch and reinforces the value of the network.
Second, it's hard not to be impressed with the scale of the capabilities especially the fact that this is less about "hey we are going to build something new from scratch" and more about "we already have all this, but we have finally figured out how we are going to go to market consistently with this."
and finally... When people ask me will brands trust Amazon, I think the answer is yes, with time. Look at it this way, so many people trust AWS. It's not a stretch to think that many growing SMB and mid-market brands could trust Amazon because replicating this level of scale and reliability may be nearly impossible otherwise.
Especially if Amazon continues to lower costs and improve the service like it has historically done with AWS. You know the guy who did this? Oh yeah, Andy Jassy. So he knows the model. And the infrastructure is already in place. So yeah, this will probably work if they can nail the go-to-market model.
That's what this is all about.
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