Unveiling: What is Amazon's heavyweight release of smart supply chain hosting service all about?

[Ebrun Original] At the "2024 Amazon Global Store Cross-Border Summit" held recently, Amazon announced the official launch of the Amazon Managed Service, which is targeted at Chinese sellers. Through a hosted service, Amazon aims to help cross-border sellers simplify supply chain management, optimize inventory layout, and accelerate delivery speed to enhance customer satisfaction.

It is reported that Amazon launched the Supply Chain by Amazon at the end of 2023, which integrates various products including Amazon Global Logistics (AGL), Amazon SEND (Amazon Cross-Border Carrier Program), Amazon Warehousing Distribution network (AWD), Amazon Multi-Channel Distribution (MCD), Amazon Fulfillment by Amazon (FBA), Amazon Multi-Channel Fulfillment (MCF), etc. The Amazon Managed Service is another innovation based on this solution.

Sellers can choose one or more services based on their business needs from the supply chain holistic solution, or choose the Amazon Managed Service to entrust the end-to-end cross-border supply chain to Amazon.

Specifically, the Amazon Managed Service is a comprehensive and automated cross-border supply chain management service that integrates Amazon's years of experience, technological capabilities, and innovation in the global supply chain field to provide sellers with end-to-end services from factory pickup to final mile delivery. It covers core links such as pickup from Chinese factories, domestic transportation, inventory integration, customs clearance, cross-border transportation, overseas warehousing, intelligent inventory management, automatic replenishment, inventory optimization, and final mile delivery.

"Sellers have told us that they want a better understanding of customer needs and the ability to create new products, but the complexity of the supply chain often occupies their energy for innovation, making it difficult for them to focus on customers and products. Therefore, the vision of Amazon's supply chain is to help sellers simplify their work." said Sunny Jain, Amazon's Global Vice President and Global Head of Amazon FBA. Since the launch of the Amazon Supply Chain holistic solution at the end of 2023, tens of thousands of sellers globally have used at least one of the Amazon Supply Chain services; by the end of October 2024, the number of Chinese sellers using two or more Amazon Supply Chain services has quadrupled.

Why introduce the concept of "smart hosting"? Peng Jiaqi, Amazon's Chinese Vice President and Asia Pacific Head of Products and Seller Education for Amazon Global Store, explained that when sellers use the Amazon Supply Chain holistic solution, some use one service, but more and more use two or three. If these services are not well integrated, sellers need to solve the problems of each link individually.

"And Amazon has data-based knowledge of how inventory is laid out in the FBA network and what the health conditions are, it also knows what consumer demand is. Based on these data and the operation rules of the entire supply chain, we can automate various links. This is the only way to truly simplify seller operations throughout the process and save the seller's effort." she said.

It is reported that the Amazon Supply Chain holistic solution includes advantages in multiple links such as head-stream to clearance, inventory management at destination country, FBA, and final mile delivery. In 2024, Amazon made improvements and optimizations for products at each link:

In the head-stream cross-border transportation phase, Amazon continuously upgrades its products and services. For instance, in 2024, Amazon Global Logistics upgraded its one-stop packaging and pickup service, which is currently covering over 100 pickup areas nationwide and servicing over 400 line routes. The Amazon Premium Warehousing (AMP) service launched at the beginning of 2024 has single-warehouse storage, salable storage, combined shipments, and full-chain tracking, and currently accounts for over 80% of Amazon Global L ogistics's global business volume. Meanwhile, Amazon Global Logistics also provides diversified warehousing solutions. Apart from the Amazon Premium Warehousing service, the Ship to AWD service also provides single-point warehousing service, helping sellers to more flexibly configure inventory.

"Amazon Global Logistics will continue to optimize capacity and provide sellers with more stable and reliable logistics services, including actively expanding more international transportation networks such as China-US and China-Europe, air and sea transportation, etc. Meanwhile, we also launched AI-driven instant communication feature ConnectPro, intelligent space estimation, automated customs clearance tax classification and other new functions to meet the needs of cross-border sellers to adjust and optimize the supply chain." said Zhang Hui, Amazon's Chinese Vice President and Head of Amazon Global Logistics China Business.

In addition, Amazon SEND is a cross-border logistics service provided by third-party logistics service providers, which complements Amazon Global Logistics's self-owned cross-border logistics services and offers more flexible and diverse head-stream cross-border logistics options for Chinese companies venturing overseas. In the past year, Amazon SEND has continually expanded its ocean head-stream transportation services, which currently cover routes from China to the United States, Saudi Arabia, United Arab Emirates, Australia, etc., and launched products with multiple service-time options to meet various seller needs.

In terms of inventory management, based on its advanced AI and machine learning algorithms, Amazon continually introduces innovative products and services to help sellers strategize and achieve better inventory layout, make reasonable use of Amazon's operational centers and AWD warehousing capabilities, and transport suitable inventory to suitable operational centers at the right time.

According to Amazon's data, after using AWD automatic replenishment, the inventory in Amazon's operational centers can be reduced by 15%-20%, and out-of-stock situations are reduced by 15%. Sellers can support smoother sales with lower inventory. These inventories are allocated to operational centers closer to customers, resulting in faster delivery speeds and higher sales conversion rates.

In final mile delivery, Amazon continues to leverage AI and robots, effectively cooperating with operational center staff to improve operational efficiency and continuously increase the delivery speed for Prime members. In the first half of 2024 alone, Amazon had more than 5 billion items delivered globally on the same day or the next day, a growth of over 30% compared to the same period last year.

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