Why sellers could leave Amazon’s cargo airline grounded

By Jonathan Bellwood, Founder & CEO, Peoplevox.

This article is brought to you by Retail Technology Review: Why sellers could leave Amazon’s cargo airline grounded.

As the global retailing giant strives to maintain maximum share of shoppers' wallets, Amazon is now investing 1.5bn dollars in an air cargo hub to support a fleet of "Prime Air" freight planes. In case those drones and flying warehouses aren't sufficient, it hopes this latest initiative will ensure end to end control of the supply chain, ultimately guaranteeing next and same day deliveries to anyone, anyplace, anytime, irrespective of geographic location or time zone.

But taking to the skies in a bid to get even closer to customers could have the opposite effect, risking them actually moving further away.

What Amazon has overlooked is the weakest link in the chain, the fulfilment capabilities of its sellers who are reliant on the quality of their own warehouses. These are the foot soldiers on the ground who, albeit unwittingly, can make or break Amazon's reputation in its quest for worldwide retail sales market domination.

Ordering everything online via Amazon is the easy part compared to the behind the scenes warehouse and fulfilment piece of the puzzle. If this falls below par, it will inevitably lead to disgruntled customers when items ordered are actually out of stock, are not as ordered, don't arrive on the day promised , or worse still, not at all. Any one of these will leave an everlasting negative impression, quite possibly causing consumers to make alternative arrangements and therefore lost sales.

Faced with this situation, fleets of 40, 100, 200 or more cargo planes delivering in bulk between countries just won't make any difference. What does make the difference is the fulfilment efficiency of the local seller warehouses and the quality of the courier firms handling 'the last mile'.

The reality is that the majority of seller warehouses are too inexperienced to match Amazon's undoubted prowess in logistical and warehouse management excellence. Short of subjugating sellers' stock into its own warehouses, something it won't do on grounds of cost and complexity, Amazon must focus on improving the connection its sellers have with their own warehouses, enabling them to become universally and uniformly 'Prime Ready'. Their small warehouse size presents a huge potential opportunity to Amazon when it comes to meeting the need for speedy delivery, from the time of purchase to final despatch.

This starts with the rapid deployment of fit for purpose e-commerce WMS systems, providing up to the second information on inventory actually available for sale, eliminating the inadvertent 'over- selling' or 'under-selling' of items, all the way through to ensuring total accuracy in their picking, packing and despatch.

In so doing, Amazon can succeed in connecting all of its seller warehouses on a truly global scale, accomplishing its mission for total quality control over the entire supply chain. Done well, this could eventually enable Amazon to phase out the huge cost of operating its own warehouses, leaving this to its seller network, and just concentrate on its core business of online retailing and providing matchless customer experience.

That's something no manner of planes, or for that matter, trains and automobiles, can hope to accomplish.