Amazon has taken to piggyback riding on the shoulders of other giants. It starts shipping the products directly from P&G and other supplier warehouses to reduce cost. This will lead to the further expansion of its operations.
Unlike its rivals, Amazon does not have to maintain large scale retail outlets. And now it has outdone itself by utilizing its suppliers’ warehouses to carry out its packing and shipping activities. This is a deal that has been mutually agreed upon. A humongous setup by Procter & Gamble has been cannibalized by Amazon for its purposes.
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Several products by P&G such as diapers and shampoos get signed, sealed and delivered by Amazon staff at the facility. This is rather like a silo within a silo. Amazon has labeled this new incentive as “Vendor Flex”. The growth of this venture could prove to be quite salubrious for Amazon. And the future ramifications are virtually limitless.
The beginning of this new plan includes only the delivery of non-perishable items. Later on this could change of course. A small scale example would be Amazon Fresh which operates from the Seattle region. Fresh produce from farms and foodstuff are the next obvious step after the experiment with P&G. One thing to keep in mind is that Amazon’s rise to fame has been chiefly due to its supply chain management policies.
The efficiency and attention to detail has seen the giant company through. Amazon has virtually removed the unnecessary complexities from the shipping process. The simplification of the supply process will lead to an automatic advantage the profits from which will accrue to Amazon alone.