Amazon Introduces “Supply Chain by Amazon” to Sellers in the United States

Launch of Supply Chain by Amazon: Key Insights

• Amazon Offers U.S. Sellers to Handle Items from Producer to Consumer: The "Supply Chain by Amazon" service allows sellers to outsource end-to-end logistics processing. It will be available for domestic pickup starting in October 2024 and for global pickup by the end of the year.

• Amazon's Logistics Relevance Is Growing: While Amazon Logistics currently lags behind the established carriers in U.S. logistics, the gap is closing. The introduction of the new service is expected to accelerate the process.

Amazon is making its “Supply Chain by Amazon” service available to sellers, enabling end-to-end logistics processing from manufacturer to consumer. The service will be available to all U.S. sellers for in-country pickup in October and for global pickup by the end of 2024. Amazon itself has said that using Supply Chain by Amazon increases sales by an average of 20 percent through faster, more efficient processing that reduces delivery times and makes orders arrive sooner.

What Is “Supply Chain by Amazon”?

The new service allows sellers to use Amazon for logistics, warehousing, distribution, fulfillment, and transportation, or any part of it, instead of doing it themselves. This benefits sellers by saving them time, hassle, and resources required to manage inventory. In September of this year, Amazon introduced the option for sellers to select a fully managed service, where Amazon provides forecasting and process optimization to ensure that every aspect of the supply chain works seamlessly. 

Compared to “Fulfillment by Amazon” (FBA), Supply Chain by Amazon expands the scope of the service to include the entire logistics process. While FBA manages warehousing, packing, picking and delivery, the Supply Chain encompasses every step from start to finish.

Amazon Made US$28.6 Billion in Parcel Revenue in 2023

With the new service, Amazon steps into direct competition with other parcel carriers in the United States, which currently hold the lead over the eCommerce giant. UPS has the highest parcel revenue in 2022 and 2023, with slight declines in revenue.

FedEx has the second highest revenue in 2022 and 2023. While UPS has declining revenues, FedEx has an opportunity to catch up. 

After the third place USPS comes Amazon Logistics. In 2023, Amazon Logistics is still about US$3 billion behind in parcel revenue. But according to the eCommerce leader itself, the use of multiple logistics services by sellers tripled in the first half of 2024. 

This could mean that Amazon will soon surpass USPS in terms of parcel revenue, and who knows, maybe it will scrape for the top two spots?

Amazon’s Package Volume Surged in 2020

Amazon was a very small player in logistics services before the pandemic, but its package volume more than doubled in 2020, at a rate of 115%.

In the following years, and despite the normalization period in 2022, when eCommerce orders slowed down, Amazon Logistics still increased order volume. In 2023, it delivered 5.9 billion packages. 

Amazon’s new supply chain service is likely going to accelerate this trend. At this rate, Amazon may well be one of the top 3 U.S. shipping providers in the foreseeable future.

Sources: About Amazon – The Load Star