Maintaining inventory stock is a great challenge for the sellers of Amazon; overstocking would increase the inventory carrying cost, and understocking makes it difficult to fulfill customer orders. Approximately 94% of the top brands and companies are selling their products and goods on Amazon. Today, we’ll discuss Amazon supply chain issues; statistical facts and figures, and top challenges and how Amazon deals with them.
Statistical Figures about Supply Chain Challenges
Some of the key statistical facts and figures about e-commerce and Amazon supply chain issues and challenges are as follows;
- Approximately 93% of the e-commerce sellers are losing their revenue
- 11% of the small businesses and 23% of the big brands reported that they have lost Buy Boxes because their goods have gone out of stock due to SC issues
- 26% of the small businesses and 44% of the big brands reported that their SC issues impacted their current inventory
- 27% of the small businesses and 42% of the big brands said that they can’t order new inventory from their suppliers
Amazon Supply Chain Issues
Some of the main Amazon Supply Chain Issues and challenges are as follows;
Buy Box Ownership
Inventory management issues have negatively impacted the brand image and perception of Amazon and how conveniently customers could procure from them. It is difficult for shoppers to win the widget or the buy box of Amazon listing that allows shoppers to quickly buy anything. Approximately 82% of the sales on Amazon are from those sellers that have won the buy box; the other sellers compete with the remaining products.
However, SC challenges and issues have made it difficult for companies and brands to win the buy box. In order to win the buy box, sellers should have a good standing position on the platform. They are as follows;
- Good customer service
- Following Amazon’s terms and conditions
- Excellent shipping performance
In the midst of SC challenges and issues, increasing shipping costs is negatively impacting the bottom line of e-commerce stores like Amazon. It is highly damaging for those e-commerce stores that import goods from other countries.
Many sellers of Amazon have reported that the shipping cost has amplified by 1.6 to 8 dollars per unit; it has greatly impacted the profit. If shipping cost remains high over time, then the business model for sellers won’t work. They wish that they would have access to better suppliers in China, Central America, Mexico, or the US.
SC issues are not only affecting the new inventory seller orders. The SC challenges would also affect the inventory that companies have in their warehouse. Therefore, companies should move their inventory out of the storage facility to avoid the storage cost. The statistics of the businesses and companies that have claimed that SC challenges impacted their existing inventory are as follows;
- 38% of the client businesses and agencies
- 44% of the large brands
- 26% of the small businesses
Along with facing universal SC issues like delayed inventory orders; sellers also face the issues and challenges relevant to their own suppliers and SC network. Some sellers can’t maintain contact and relationships with their suppliers, including ordering the new inventory. A small number of sellers have reported that their supplier has gone out of business.
The sellers of Amazon are cautious about establishing relationships with the suppliers or finding new suppliers in case one supplier is out of business while placing an inventory order. Software and applications like supplier databases offer you access to high-quality producers and manufacturers.
Online stores and e-commerce platforms could wait for the customer orders, after ordering inventory from the suppliers, especially from the sea. Small businesses and companies are facing inventory order delays along with casual manufacturing time in the midst of SC challenges and issues. They would experience long product and goods delays if their product order is late.
Amazon is also experiencing inventory order delays; some sellers face inventory order delays that are longer than one month. These types of delays negatively impact the sale; revenue and profitability of the company; especially if you are planning to take a loan from the bank.
How Amazon Deals with SC Challenges
Some of the methods on how e-commerce platforms and Amazon deal with supply chain issues and challenges;
- Discontinuing those products and goods that are causing delays
- Procuring and renting out more inventory storage
- Launching and introducing products and goods that are readily available
- Changing fulfillment methods and strategies
- Decreasing advertisement spending and expense
Conclusion: Amazon Supply Chain Issues
After an in-depth study of Amazon supply chain issues; we have realized that SC challenges are negatively impacting the e-commerce platforms like Amazon. If you are learning about the supply chain challenges of Amazon; then you should keep in mind the abovementioned challenges and tips on how to deal with them.
Ahsan is an accomplished researcher and has a deep insight in worldly life affairs. He goes Live 3 days a week on various social media platforms. Other than research writing, he’s a very interesting person.