Responsiveness Versus Efficiency in Supply Chain Management in Amazon

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Introduction

Supply chains are crucial for most modern businesses, and proper management of that structure allows companies to maintain high performance. Product or service delivery is the primary point involved in customer experience, and an effective supply chain strategy increases their satisfaction without affecting the cost (Turban et al., 2018). One such approach is fast track shipment when a client pays for their order to be transported quicker than usual. It might cost more to get an urgent delivery, and the problem of balance between the prices and experience might occur (Al-Husain & Khorramshahgol, 2020). The world’s most valuable company, Amazon, applies that strategy, and this paper aims to analyze if it is responsive for customer experience or efficient for the costs.

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Fast Track Delivery

Businesses that provide multiple shipment schedules and opportunities are more valued by clients, and these factors affect the overall purchasing decision. Fast track delivery is a part of a company’s supply chain strategy that allows customers to receive their orders urgently. Timely or even a quicker shipment vastly affects clients’ satisfaction, and meeting their expectations can help businesses gain loyalty (Naqvi et al., 2020). Indeed, responsiveness to client’s demands covered in the ability to update the chain is crucial for big companies. However, fast track delivery can be expensive for a customer due to the high fees the suppliers charge for the service.

Amazon Fast Track Delivery

Amazon is the e-commerce platform where almost any item can be bought and safely shipped worldwide promptly. It is vital to mention that Amazon’s sellers choose to set their delivery process or not, and immediate shipment options are only available for marketers who make the platform responsible for transportation. The company’s fast track delivery is based on several tariffs depending on a client’s location, subscription, weight, and price of a product to transport.

Amazon’s distribution strategy applies warehouses, where the goods are registered and can be easily found at a location closest to a customer (Amazon, 2021). Moreover, its supply chain uses automotive technologies like machine learning and blockchain to manage a significant volume of data, requests, and reviews (Amazon, 2021). Combining these factors allows the company to have a two-day delivery policy regardless of customers’ location. However, Goel et al. (2020) state that “Amazon e-commerce sites should take the delivery of products really serious with better return policies to make themselves credible before the eyes of the customer” (p. 98). It is necessary to assess Amazon’s shipping services’ responsiveness and analyze its cost efficiency for a client to understand if these innovations are valuable.

Responsiveness of Amazon Supply Chain

The United States’ citizens are the most frequent Amazon’s client, therefore it is convenient to discuss how the platform’s supply chain works for that country. Amazon’s fast track delivery is responsive because multiple delivery options can be chosen for almost every product and state. For example, ordering a $17,99 bed pillow to San Francisco will cost $5,99 and be delivered within 4-5 days (Amazon, 2021).

Distribution is free when an order costs more than $25, however, it takes 5-8 days to be received. Moreover, it includes the forever free fast shipping for any products for Amazon Prime subscribers who pay $13 monthly or $119 yearly to receive such options (Amazon Prime, 2021). If a client wants to receive an order in 2 days, they will have to subscribe to the Prime program for one month free from any payments. Moreover, Prime accounts’ holders have an option to get the same-day delivery for free, while it costs $12,99 per item for non-subscribers (Amazon Prime, 2021). Although these conditions look suitable and have average delivery prices and a loyalty program, Amazon’s distribution strategies are inconvenient for ordering cheap products in low quantities.

Efficiency of Amazon Supply Chain

Efficiency based on the price customer needs to pay for the faster delivery reveals that Amazon offers a rather convenient service such as Prime subscription in exchange for the quick delivery. In the case when a customer is a loyalty program participant, they get all of the orders with free shipping within two days. However, Amazon pays attention to the overall customer experience: the company guarantees that an order will be shipped exactly on time and have a refund policy for the cases when delays occur (Amazon, 2021). The $13 subscription basis forces people to order more to meet the costs and provides the company with a stable money flow to maintain fast delivery. For a person without a Prime account, ordering from Amazon might be efficient only if a product is relatively expensive or there is no need in fast track delivery.

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Usual shipment costs less and does not require any special conditions, but takes more days to be completed, thus it is a cost-effective model. Compared to the free and fast delivery for Prime subscribers, the shipment costs are around $5-6 for goods that cost less than $25. It is more efficient for the company as a customer pays for the transportation expenses. Although there is a balance between responsiveness and efficiency for usual delivery, Amazon promotes the Prime subscription to establish a loyal relationship with the clients and beat the competitors.

How Fast Track Makes Amazon Delivery Competitive

Fast track delivery significantly increases Amazon’s competitiveness, and the company continues to improve its shipment opportunities. However, from a customer’s perspective, utilizing Amazon’s quick transportation might be inefficient as it forces them to subscribe to a loyalty program. However, the guarantee of safe and timely delivery allows Amazon to win more clients as that experience highlights the platform’s trustworthiness. Customer satisfaction is determined as a descendant of perceived quality, which vastly affects loyalty and purchasing decisions (de Fatima Carvalho et al., 2020). Delivering an order exactly when expected safely makes Amazon competitive and encourage people to get back and buy more.

Conclusion

Amazon’s responsiveness is limited by the options the platform offers. In the United States, an order will be delivered within two days for Prime subscribers, 2-5 days in the faster manner for an average price of $6, or 5-8 days for free if goods cost more than $25. Efficiency is tied to the price of a purchase, and buying cheap products with fast track delivery (2-5 days) is rather expensive. Amazon’s supply chain management is built to fulfill their subscribers’ needs who remain loyal, order more often, and provide the company with monthly or annual fees for the priority service.

References

Al-Husain, R., & Khorramshahgol, R. (2020). Incorporating analytical hierarchy process and goal programming to design responsive and efficient supply chains. Operations Research Perspectives, 100149. Web.

Amazon. (2021). Supply chain management. Web.

Amazon Prime. (2021). Prime subscription: delivery. Web.

De Fatima Carvalho, H., de Sousa Saldanha, E., & Amaral, A. M. (2020). The mediation effects of customer satisfaction on the relations between product price, service quality and purchasing decision. Timor Leste Journal of Business and Management, 2, 14-26. Web.

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Goel, P., Verma, P., Al Mutairi, Q., Bhardwaj, R., & Tyagi, S. (2020). Customer experiences, expectations, and satisfaction level towards services provided by Amazon. International Journal of Tourism and Hospitality in Asia Pacific, 3(1), 89-101. Web.

Naqvi, M. H., Asim, D. M., & Manzoor, S. (2020). Analysing the impact of supply chain agility on customer satisfaction through responsiveness and innovation. CenRaPS Journal of Social Sciences, 2(1), 26-40. Web.

Turban E., Outland J., King D., Lee J.K., Liang TP., Turban D.C. (2018). Order fulfillment along the supply chain in e-commerce. A Managerial and Social Networks Perspective, 501-534. Web.

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BusinessEssay. (2022, November 26). Responsiveness Versus Efficiency in Supply Chain Management in Amazon. Retrieved from https://business-essay.com/responsiveness-versus-efficiency-in-supply-chain-management-in-amazon/

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BusinessEssay. (2022, November 26). Responsiveness Versus Efficiency in Supply Chain Management in Amazon. https://business-essay.com/responsiveness-versus-efficiency-in-supply-chain-management-in-amazon/

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"Responsiveness Versus Efficiency in Supply Chain Management in Amazon." BusinessEssay, 26 Nov. 2022, business-essay.com/responsiveness-versus-efficiency-in-supply-chain-management-in-amazon/.

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BusinessEssay. (2022) 'Responsiveness Versus Efficiency in Supply Chain Management in Amazon'. 26 November.

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BusinessEssay. 2022. "Responsiveness Versus Efficiency in Supply Chain Management in Amazon." November 26, 2022. https://business-essay.com/responsiveness-versus-efficiency-in-supply-chain-management-in-amazon/.

1. BusinessEssay. "Responsiveness Versus Efficiency in Supply Chain Management in Amazon." November 26, 2022. https://business-essay.com/responsiveness-versus-efficiency-in-supply-chain-management-in-amazon/.


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BusinessEssay. "Responsiveness Versus Efficiency in Supply Chain Management in Amazon." November 26, 2022. https://business-essay.com/responsiveness-versus-efficiency-in-supply-chain-management-in-amazon/.