Quick Amazon recap: Jeff Bezos used to work on Wall Street when, in 1994, he began to see the internet revolution take place and thought “hey, gonna start an internet company”. His parents provided the initial startup capital straight out of their personal savings. You need to read this, it amazes me every time:

“The first initial start-up capital for Amazon.com came primarily from my parents, and they invested a large fraction of their life savings in what became Amazon.com. And you know, that was a very bold and trusting thing for them to do because they didn’t know. My dad’s first question was, “What’s the Internet?” Okay. So he wasn’t making a bet on this company or this concept. He was making a bet on his son, as was my mother. So, I told them that I thought there was a 70 percent chance that they would lose their whole investment, which was a few hundred thousand dollars, and they did it anyway.”

Aren’t parents the best things ever created?!

Long story short, within its first month Amazon was doing $20,000 per week in sales. In 1995 Jeff Bezos raised an $8 million round of funding from Kleiner Perkins and things just got better from there. Amazon went public, acquired a lot of companies and built its empire. So basically, in a little more than two decades, Amazon went from an online bookseller to the biggest online retail store.

AMAZON IS CHANGING SUPPLY CHAIN MANAGEMENT

In the past couple of years, Amazon has developed, implemented and introduced new products and ideas that we didn’t think were possible. From one-day delivery to new technology (I mean, freaking drones?!), the e-commerce giant has been innovating and, consequently, changing the way supply chain management operates all over the globe.

Many companies are following Amazon’s path and investing in e-commerce sales. The rise of e-commerce came with a major need of reshaping the supply chain industry. New challenges are on the table and your supply chain must provide a high-level service across all channels. Here are the top 3 supply chain changes businesses are having to deal with:

1. SHIPPING COSTS AND SPACE

In the early days of e-commerce, people got excited about not having to drive to the mall, find parking, wait in lines… all you had to do was order online and wait for the package to be delivered to your doorstep. It was like a dream come true, right?! The shipping costs, however, were never that dreamy.

Giants like Amazon have the resources to operate distribution centers in many locations, being able to offer its low-cost or free shipping in one day or a couple more. Reality check: other retailers are not as big as Amazon. It takes a lot of money to operate distribution centers all over the place.

Supply Chain Solutions strategically placed one of its clients in different distribution centers near metropolitan areas, which reduced costs and delivery time. The idea is also to use retail store warehouses as a small distribution center. Optimizing the use of the space and, again, reducing your shipping costs.

2. TECHNOLOGY

Remember back in the day when the warehouse team printed instructions on what inventory to ship each morning? They had to go check where that item was, get it out of the shelves, take it to the shipping station and track everything manually. Well, with the rise of e-commerce we saw an expansion of delivery locations, warehouses, and distribution centers, which made automation a key feature to supply chain success.

If your entire supply chain process is consolidated onto the same technology platform, you will save time, money, improve operations and reduce costs. You will know your inventory levels by the click of a button instead of somebody else’s weird handwriting. You will be able to accurately track inventory control and shipping to all your sales channels: e-commerce, retailers, and wholesalers.

You need a software that will consider your entire network and we can provide that software. It takes into account production, warehousing, transportation and inventory costs, and matches that with service requirements to give you quality information to make intelligent business decisions. With all the data that the software collects, some decisions can basically be made automatically.

3. RETURNS MANAGEMENT

At least 30% of all products ordered online are returned as compared to 8.89% in brick-and-mortar stores. Some of the main reasons are damaged or wrong products (which can be highly reduced by improving your process with the implementation of the software technology we just talked about). However, another main reason for returns is just the good old “hey, I didn’t like it”.

I have a friend who orders a bunch of dresses online knowing that she just wants to try them on, pick her favorite, and return the others. 92% of consumers say they will buy something again if returns are easy (she does buy at the same store over and over because their return policy is great).

A significant amount of your profitability and savings might be “hidden” not only by the returns process itself but also the lost revenue due to lack of visibility. Managing returns is a tough task, but by using the correct technology you will be able to efficiently handle them.

Supply Chain Solutions’ returns management software reduced one of our client’s return process from 5 days to 24-36 hours; and from 28 people working in a 30,000sqft warehouse to 11 people working in 5,000sqft.