Amazon’s Brick & Mortar Model For Supply Chain Managers

In Amazon’s expansion to brick-and-mortar stores, we have Maria Haggerty’s perspective, Founder and President Dotcom Distribution,  to share with you.

SCMR: What new pressures will this the launch of Amazon’s brick-and-mortar store] create in the global supply chain?

Haggerty: I’ve been wondering why Amazon would choose Manhattan of all places to put their first store. After all, you can get anything in New York, so there’s no practical need for an Amazon-type store. I suspect that Amazon will use this as a warehouse to quickly deliver online orders to New Yorkers as well. That would put more pressure on other suppliers to make shipping faster. Amazon is always opening up the conversation for the global supply chain to find a way to send consumers their online orders faster and at a lower cost. This move is the latest endeavor to do that. New Yorkers will be able to buy online and pick up in-store to have that immediacy. Globally, shippers will watch this move and see if there’s anything they can glean from Amazon’s R&D.

SCMR: How will supply chain managers address risk?

Haggerty: Amazon is at the forefront of this type of ecommerce delivery. There’s more pressure for other supply chain managers to find other, better solutions to the fast, cheap delivery issue. These managers will likely watch Amazon’s move closely before deciding how they’ll adapt their system.

SCMR: Is there a reverse logistics component to this?

Haggerty: Certainly! It’s twofold. A brick-and-mortar store is a major benefit to consumers who want to return orders. Though acclimated to buying online, consumers still hesitate before purchasing thanks to the return issue. Many online retailers, even Amazon, have struggled to make this process pain-free. With a physical location, we can expect more Amazon shoppers to make more returns, but also more purchases since they’ll perceive the returns process as easier and quicker. From the retail side, this presents a challenge for Amazon. As New Yorkers return products to the Amazon store, that location could potentially collect a ton of products that won’t resell easily in that location. For example, car accessories wouldn’t sell as well in Manhattan as they would in the Midwest because most New Yorkers take the subway. Amazon will have to find a solution to reselling those kinds of goods.

SCMR: What kind of retailers and manufacturers will profit most?

Haggerty: Retailers and manufacturers need different things to be profitable. The retailers that will profit most are the ones looking to up their game to get their products to customers in a more efficient manner. Having a distribution center in Manhattan will make getting their online orders to New Yorkers faster. From the manufacturer’s perspective, those whose products display better physically will profit most in Amazon’s store. For some products, photos don’t do them justice, so they have a harder time selling online.

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