When you placed an order for products on Amazon, did you ever wonder how it manages to deliver it to you on time without making any delivery mistakes?
Customer satisfaction or customer service is one of the key elements of any successful business. Similarly, in an online shopping business, the right product has to reach the right customer in the shortest amount of time.
The efficient supply chain system
Amazon's success is dependent on the company's efficient logistics system. Would you buy from the website if it were delivered to you 5 days later than promised? Or if you were given a shirt that was different from the one you ordered?
The idea behind its efficient system is to get it right in the first attempt.
The business model
Amazon not only sells its own products but also lists products of other sellers. It is a market place for buyers and sellers. The delivery of all these products is fulfilled by "Amazon Fulfillment Centres" (FC).
It is a gigantic warehouse where products are stored, picked on order, packed and shipped to customers.
Amazon fulfillment centres in India
It started with one fullfillment centre in Bhiwandi, Maharashtra in 2013 when Amazon India had only 2 categories; books, music, and videos with about a 100 sellers.
As of September 2017, the company had signed up over 200,000 sellers and built 40 more FCs with space as much as 13 million cubic feet. (Source: Quartz India)
The seller labels the product with a barcode and item description and makes a delivery appointment, where in a truck is assigned to him/her to pick up the product. The trucks drop these goods at the FC at an allotted time.
These goods are then placed in the staging area for segregation. Product shipping is categorised in three:
- Fulfilled by Amazon programme (a vast majority): the company stores and ships the product for a fee
- Easy Ship: the product is stored by the seller but shipped by Amazon for a fee
- Sellers store and ship products themselves.
In the warehouse, the product labels are scanned at the receiving station to identify the product's dimensions and features.
The product is then placed on a trolley which has another set of barcodes.
The whole system is dependent on these barcodes.
The products in trolleys are then placed in the shelves of the warehouse where each compartment has a barcode. So when the warehouse employee places the product there, he/she scans the location of the compartment. This way the presence of the item is noted on Amazon India's database and reflects as "in stock" to customers on the website.
The delivery to storage procedure is completed within 24 hours.
What happens when you click “Buy Now”?
When you buy a product, a request is placed at the warehouse. With its barcode system, the employee knows in exactly which compartment the product is placed.
These products are picked and put in coloured tubs. One colour is for multi-item order while the other is for single-item order.
The products are then packed, labelled with the customer's details and separated based on "next day delivery" or normal order to decide the mode of transport.
Amazon's warehouses in the US use robots while in India, the packing, sorting and most of the movement is done using human labour.