• Advertise
  • Contact Us
  • About Us
  • Supplier Directory
  • SCB YouTube
  • Login
  • Subscribe
  • Logout
  • My Profile
  • LOGISTICS
    • Air Cargo
    • All Logistics
    • Express/Small Shipments
    • Facility Location Planning
    • Freight Forwarding/Customs Brokerage
    • Global Gateways
    • Global Logistics
    • Last Mile Delivery
    • Logistics Outsourcing
    • LTL/Truckload Services
    • Ocean Transportation
    • Rail & Intermodal
    • Reverse Logistics
    • Service Parts Management
    • Transportation & Distribution
  • TECHNOLOGY
    • All Technology
    • Artificial Intelligence
    • Cloud & On-Demand Systems
    • Data Management (Big Data/IoT/Blockchain)
    • ERP & Enterprise Systems
    • Forecasting & Demand Planning
    • Global Trade Management
    • Inventory Planning/ Optimization
    • Product Lifecycle Management
    • Sales & Operations Planning
    • SC Finance & Revenue Management
    • SC Planning & Optimization
    • Sourcing/Procurement/SRM
    • Supply Chain Visibility
    • Transportation Management
  • GENERAL SCM
    • Business Strategy Alignment
    • Education & Professional Development
    • Global Supply Chain Management
    • Global Trade & Economics
    • HR & Labor Management
    • Quality & Metrics
    • Regulation & Compliance
    • SC Security & Risk Mgmt
    • Supply Chains in Crisis
    • Sustainability & Corporate Social Responsibility
  • WAREHOUSING
    • All Warehouse Services
    • Conveyors & Sortation
    • Lift Trucks & AGVs
    • Order Fulfillment
    • Packaging
    • RFID, Barcode, Mobility & Voice
    • Robotics
    • Warehouse Management Systems
  • INDUSTRIES
    • Aerospace & Defense
    • Apparel
    • Automotive
    • Chemicals & Energy
    • Consumer Packaged Goods
    • E-Commerce/Omni-Channel
    • Food & Beverage
    • Healthcare
    • High-Tech/Electronics
    • Industrial Manufacturing
    • Pharmaceutical/Biotech
    • Retail
  • THINK TANK
  • WEBINARS
    • On-Demand Webinars
    • Upcoming Webinars
    • Webinar Library
  • PODCASTS
  • VIDEOS
  • WHITEPAPERS
Home » Five Ways to Adapt to Amazon’s Ever-Changing Supply Chain Rules

Five Ways to Adapt to Amazon’s Ever-Changing Supply Chain Rules

June 8, 2018
Rob Zomok

In its growth from a startup online bookseller to the “we-sell-everything” titan among retailers, Amazon has the retail world in a panic. As the marketplace where sellers have created overnight businesses into full livelihoods because everyone wants to buy there, Amazon’s every move can have far-reaching effects. As it has grown so rapidly, more and more of its supply chain infrastructure costs are being passed along to sellers who use Fulfillment By Amazon (FBA).

Amazon’s need to move unimaginable volumes of goods quickly has necessitated that some less-than-desirable costs be handed on to sellers, indirect expenses as well as costly opportunity losses that are facilitated by mere process.

How big can Amazon get? Who knows? One thing is for sure – it can’t just keep getting bigger without adapting its supply chain. As a company’s growth expands at such feverish rates, its infrastructure has to adapt or ultimately it will collapse on itself.

Hints of Amazon’s need for supply chain optimization include:

  • Increases in storage fees for inventory, implementing price thresholds for single low-cost items unless purchased with something else

  • Interest in the market to use others' space as FBA warehouses

  • Increasing fees and reducing services for returns

Amazon will likely continue to tweak rules and requirements as they grapple with growth rates that outpace their ability to expand infrastructure and turn a focus to profitability.

Even if you’re not an Amazon seller of any scale at all (but especially if you are), one of the big challenges ties back to the increasing fees and decreasing service for returns. Because it’s easier for customers to choose “damaged” or “defective” as the reason for return (defective gets them free shipping), you pay dearly for that. In the Amazon warehouse, if one of those is indicated by the customer as the reason for return, the product won’t be placed back into your fulfillable inventory. They’re moving too much product too quickly to thoroughly assess returned products. In some cases, if it’s evident that the product has been opened, it gets pulled.

The result is that Amazon pulls a much higher-than-normal percentage of good products back through the reverse supply chain – at the cost of the seller.

How to adapt:

  1. Avoid the 2 percent discount to have Amazon handle returns unless your item is low-cost. The small discount for doing this will evaporate in what it costs you in other ways.

  2. Leveraging a regional network for triaging and evaluating your returns to eliminate the “defective” inventory will likely yield an instant return. It allows more inventory to flow back into stock regionally thus reducing transportation. At the very least, you can earn more on it in liquidation than through allowing Amazon’s warehouse workers to blindly pull it from your fulfillable inventory.

  3. Leverage a single-pane returns platform to gain visibility into returns activity and trends, apply some cost-saving analytics and better assess policy impacts.

  4. Utilize regional returns centers to take excess or slow-moving goods temporarily before reinjecting them into Amazon’s or your own supply chain.

  5. Liquidate slow-moving or end-of-life-cycle inventory into a non-competitive channel where you can still make better than zero on it, without it competing against your full-price inventory.

Rob Zomok is president of global operations at Inmar, an intelligent commerce solutions company located in Winston-Salem, North Carolina.

RELATED CONTENT

RELATED VIDEOS

Supply Chain Finance & Revenue Management Supply Chain Planning & Optimization Technology Business Strategy Alignment Global Supply Chain Management E-Commerce/Omni-Channel Pharmaceutical/Biotech Retail
KEYWORDS Business Strategy Alignment E-Commerce/Omni-Channel Global Supply Chain Management Pharmaceutical/Biotech Retail SC Finance & Revenue Management SC Planning & Optimization Supply Chain Analysis & Consulting Technology
Rob Zomok

More from this author

Subscribe to our Daily Newsletter!

Timely, incisive articles delivered directly to your inbox.

Popular Stories

  • A GIANT EXCAVATOR BEARING THE JOHN DEERE LOGO SITS IN A FIELD IN DAPPLED SUNLIGHT

    EVs Finally Land at North America’s Biggest Machinery Conference

    Technology
  • A ROW OF HOT AIR BALLOONS CONTAINS A ROCKET ZOOMING PAST THEM

    When Adopting New Tools for the Supply Chain, Don’t Forget Change Management

    Technology
  • A mature male architect stands with his arms crossed at a building site

    Biden Wants American-Made Construction Materials. Is That Feasible?

    Sourcing/Procurement/SRM
  • DEEPLY CRACKED EARTH UNDER A BLUE CLOUDY SKY

    It’s Time to Embed Climate Considerations Into Supply Chain Strategies

    Sourcing/Procurement/SRM
  • A WOMAN SIGNS FOR A PACKAGE DELIVERY AT HER OPEN FRONT DOOR

    Making Deliveries More Sustainable, Before Mainstream EV Adoption

    Logistics

Digital Edition

Scb q1 2023 cover

2023 Supply Chain Management Resource Guide: Packing for a Difficult Year

VIEW THE LATEST ISSUE

Case Studies

  • New Revenue for Cloud-Based TMS that Embeds Orderful’s Modern EDI Platform

  • Convenience Store Client Maximizes Profit and Improves Customer Service

  • A Digitally Native Footwear Brand Finds Rapid Fulfillment

  • Expanding Apparel Brand Scales Seamlessly with E-Commerce Technology

  • How a Global LSP Scaled its Security Program and Won More Business

Visit Our Sponsors

Orderful Yang Ming Alithya
Barcoding Blue Yonder BNSF Logistics
CoEnterprise Data Capture Deposco
E2open GAINSystems Generix
Geodis GEP GreyOrange
Here Holman Logistics Honeywell Intelligrated
IFM Infor Inmar
Keelvar Kinaxis Korber
Lean Solutions Group 2H Liberty SBF Locus Robotics
Logility LogistiVIEW Lucas Systems
MCA Connect MPO Nvidia
Old Dominion OpenText ORTEC
Overhaul Parsyl PMMI
QIMA Redwood Logistics Ryder E-commerce by Whiplash
Saddle Creek Logistics Schneider Dedicated Setlog Holding AG
Ship4WD Shipwell Shyft
Sourcemap Tecsys TGW Systems
Thomson Reuters Tive Trailer Bridge
Vecna Robotics Verity
Verusen
  • More From SCB
    • Featured Content
    • Video Library
    • Think Tank Blog
    • SupplyChainBrain Podcast
    • Whitepapers
    • On-Demand Webinars
    • Upcoming Webinars
  • Digital Offerings
    • Digital Issue
    • Subscribe
    • Manage Your Subscription
    • Newsletters
  • Resources
    • Events Calendar
    • SCB's Great Supply Chain Partners
    • Supplier Directory
    • Case Study Showcase
    • Supply Chain Innovation Awards
    • 100 Great Partners Form
  • SCB Corporate
    • Advertise on SCB.COM
    • About Us
    • Privacy Policy
    • Contact Us
    • Data Sharing Opt-Out

All content copyright ©2023 Keller International Publishing Corp All rights reserved. No reproduction, transmission or display is permitted without the written permissions of Keller International Publishing Corp

Design, CMS, Hosting & Web Development :: ePublishing