Amazon this morning announced an expansion of its logistics network that will allow its selling partners to move their products in bulk from Amazon’s low-cost storage service, Amazon Warehousing Distribution (AWD), to any sales channel, including physical stores and warehouses, instead of only directly to consumers’ doorsteps.
The new solution, called Multi-Channel Distribution (MCD), will allow sellers to replenish all their sales and fulfillment channels from a single inventory pool, Amazon explains, which simplifies supply chain management and allows for cost savings on inbound shipping.
The solution also allows sellers to leverage Amazon’s investment in its distribution network and technology to maintain the right inventory levels across all their sales channels, including online and physical store locations, in order to grow their business.
MCD is currently in a pilot testing program with an initial set of sellers but it’s expected to reach all Amazon sellers at some point later this year.
The new service was one part of several announcements Amazon made this week at its Amazon Accelerate conference in Seattle. Here, the retailer introduced its broader initiative Supply Chain by Amazon, an end-to-end, fully automated set of supply chain services that will provide sellers with solutions to move their products from manufacturing locations to customers worldwide, while benefiting from Amazon’s logistics, warehousing, distribution, fulfillment and transportation capabilities.
The solution builds on the advances initially introduced with Fulfillment by Amazon (FBA) back in 2006, which allows Amazon to pick, pack and ship sellers’ products with faster speeds and better reliability — and, at a rate that’s 70% less expensive than other fulfillment services, Amazon claims. FBA has resulted in Amazon now delivering some 300 million unique products with fast, free shipping for its customers.
But while FBA tackled fulfillment, the new services being introduced are focused earlier in the product journey, starting with manufacturing. Now, Amazon will be able to pick up inventory from manufacturing facilities around the world, ship it across borders, handle customs clearance and ground transportation, store inventory in bulk and manage replenishment across Amazon and sellers’ other channels.
Related to this, Amazon is expanding its origin services closer to sellers’ factories to enable additional pick-up services for all its ocean products at key manufacturing hubs, as part of its Amazon Global Logistics (AGL) offering. This includes origin services, ocean freight shipping, customs clearance and more.
In addition, sellers later this year will be able to use Amazon’s Partnered Carrier Program (PCP) to streamline domestic transportation into AWD centers. Plus, Amazon is eliminating peak pricing for AWD in the fourth quarter so sellers can more efficiently manage their inventory levels even during the busy holiday season.
FBA will also offer automatic inventory replenishment which leverages Amazon’s machine learning and supply chain optimization capabilities to move inventory to the optimal Amazon fulfillment centers and move inventory to off-Amazon channels through the new Multi-Channel Fulfillment (MCF).
“Our vision has always been to make it as easy as possible for sellers to serve customers around the world, and providing our selling partners with a simple, fast, cost-effective solution to a challenge that has become increasingly unpredictable and complex is an important investment in sellers’ success,” said Dharmesh Mehta, Amazon vice president of Worldwide Selling Partner Services.
“With Supply Chain by Amazon, Amazon will pick up sellers’ inventory directly from their factory, and manage the supply chain logistics through delivery to customers’ doorsteps. Sellers will be able to offload even more of the complexity of their supply chain logistics to Amazon, both for the products they sell in Amazon’s store and through other sales channels including online and physical store locations. We are excited to help sellers, both on and off Amazon, save more money, drive more business growth, and have more time to continue inventing amazing products for customers,” he added.