What is "The Amazon Effect"?

“The Amazon Effect” is the impact that the business has had on the world since its creation in 1994. This can range from its impact on traditional brick and mortar business, to the impact it has had on the shopping trends and expectations of customers worldwide. 

In this article, Supply Chain Digital investigates how “The Amazon Effect" has impacted the landscape of supply chain and manufacturing in terms of customers, supply chains, and technology.

On Customers

Due to the always-available and constantly cheap prices that Amazon is able to offer, customer’s expectations when it comes to delivery have changed. A few years ago, no one would think twice about waiting for a few days/weeks for something that they ordered online. Now, with Amazon even offering same day delivery in some territories, customers expect the same level of efficiency when interacting with other suppliers. 

This can be a hard pace for smaller companies to keep up with and is causing similar issues with larger suppliers. The effect has even gone as far as to reduce physical shop traffic, which has been reaffirmed by the global pandemic. It is easier for a consumer to stay at home and order a product to arrive the next day for convenience. The increasing demand at a smaller price means that customers are increasingly impatient, and sometimes will choose products of a lower quality, if it means they can get it faster. 

On Supply Chain

As supply chains in their most basic level are responsible for the delivery of goods from A to B, Amazon has had an effect on them too. With the increased demand from customers, supply chains globally are having to develop and adapt to keep up with these high-volume requests. The use of 3 and 4PL’s are increasing as their networks and resources are able to rival those of Amazon and remain competitive.

As a result of this increased demand, supply chains are having to focus on efficiency and end-to-end traceability. (To learn more about end-to-end traceability, sign up to our exclusive webinar hosted for HERE Technologies and Sigfox) Only with a focus on the areas to increase efficiency and reduced costs, can companies hope to compete with giants such as Amazon.

On Technology

Amazon is at the forefront of the technology revolution when it comes to supply chains. One example of this is the focus on pursuing patents relating to drone technology. This ranges from responsive drones to airborne fulfillment centres. 

They have also invested heavily in AI e-commerce tools, such as those created to detect trends and potential recommendation fluctuations. Even investing in simple chatbot AI can play a huge part in staying in the game. The reach of amazon’s influence in terms of technology can be seen across the supply chain world, with global organisations increasing investment to stay competitive. 

Overall, “The Amazon Effect” can be seen throughout the supply chain world and has impacts across the rest of the consumer life cycle. They are a key player leading the way in defining the direction that e-commerce and logistics are evolving.