The Amazon supply chain is an astounding advancement in retail logistics. It continually optimizes every link in the chain to meet customer satisfaction, aiming to become the preferred retailer in America and beyond. With regard to Amazon’s expansion to the European continent, it has been considered successful in spite of several challenges. Amazon organized three equal services to meet the particular needs of its diverse client bases in European states.
Amazon has faced some difficulties in terms of supply chain management processes in Europe. Amazon launched its business in Europe in 1998 in the United Kingdom and Germany (Garner, 2018). The expansion continued in France, Italy, Spain, and the Netherlands, impacting these countries’ whole economic sectors (Garner, 2018). The challenges are regulations in Germany and France, payment options, supply factors and low development of Electronic Data Interchange (EDI) in Europe. Therefore, due to an unorganized supplier base and IT capacities, the corporation should have adjusted its strategy from the perspective of European circumstances.
To begin with, Amazon acknowledged the regulatory aspect by implementing a free shipping policy. To face the European market competition, the company obtains the data from suppliers who are considered competitors (Chee, 2018). German and European Commission focus on the standard agreements between Amazon and marketplace sellers, which is beneficial for Amazon as it provides analysis and uses third-party seller data (Chee, 2018). According to Page (2020), Europe intends to file “antitrust charges against the online behemoth over its treatment of third-party”. Thus, competition regulation in European countries puts pressure on economic performance and compliance with European laws.
Furthermore, another challenge is payment differences, which made the company offer locally preferred payment options; in the case of Europe, most customers use cheques rather than credit cards. Moreover, referring to IT advances, in the US, the communication between supply chain management and distributors is maintained through adopting EDI (Berry, 2021). Such technologies’ principal purpose is to provide a standardized exchange of transactional and other digital information (Hugos, 2018). It enhances opportunities for programmatic interaction between computer systems of various segments and organizations (Hugos, 2018). However, in Europe, EDI practice is not developed sufficiently; consequently, Amazon had to build wholesalers relationships directly.
Amazon refuses third-party logistics services (3PL operators) and fulfills all orders at its own expense. However, these days, Amazon boxes are shipped internally by ordering the ZIP codes’ packages (Hahn, Kim and Youn, 2018). The latter are trucked to a Postal Service office near the address (Hahn, Kim and Youn, 2018). The changes have been adopted; for instance, in Germany, the company is operating 240 delivery vehicles by six sub-contractors (Hahn, Kim and Youn, 2018). For the implementation of fast and efficient delivery worldwide, supply chain management has resulted in warehouses around the world (Hahn, Kim and Youn, 2018). Thus, Amazon, paying great attention to the delivery services, is required to modify its logistics and policy.
To sum up, Amazon constantly strives to improve its supply chain and innovates from the initial side, presented by suppliers and from the final stage – delivery to the customer. Thus, the challenges of the company in the European context are determined by a regulatory aspects, payment, IT capabilities, and third-party logistics services. Overall, such difficulties have led to modifications in a European strategy to maintain economic profitability and a stable market position.
Reference List
Berry, J. (2021) ‘Logistics in the Cloud-Powered Workplace’, in Sullivan, M and Kern, J. (eds.) The Digital Transformation of Logistics: Demystifying Impacts of the Fourth Industrial Revolution, New Jersey: John Wiley & Sons, pp. 129-142.
Foo Yun Chee, F. Y. (2020) ‘Europe charges Amazon with using dominance and data to squeeze rivals’, The Reuters, Web.
Garner, B. A. (2018) ‘Amazon in the global market’, Journal of Marketing and Management, 9(2), pp. 63-73.
Hahn, Y., Kim, D., and Youn, M. K. (2018) ‘A Brief Analysis of Amazon and Distribution Strategy’, The Journal of Distribution Science, 16(4), pp. 17-20.
Hugos, M.H. (2018) Essentials of supply chain management. New Jersey: John Wiley & Sons.
Page, P (2020) ‘Today’s logistics report: Europe probes Amazon; Unilever gets nimble; Steamed rice buyers’, The Wall Street Journal, Web.