Not even another player in commerce can boast of a more sophisticated and streamlined supply chain than that of Amazon. At the core of this engine is this involved supplier ecosystem of various tiers of both manufacturers, wholesalers, private label brands, and even third parties.
Learning about this system not only interests, but it’s an important factor for retail businesses, if they want to succeed, and for customers interested in the origins of the products. For example, using an RFID inventory management system is a part of the process in Amazon’s warehouse.
Let’s describe the path that Amazon supports, which brings goods from vendors to your door.
- First Party (1P) and Third-Party (3P) Sellers in the Platform
Two key models define Amazon’s supply approach: First-Party (1P) and Third-Party (3P).
In the 1P model, vendors serve like wholesale providers. The Vendor Central program enabled vendors who supply Amazon with products to sell. Amazon is responsible for product ownership and customer sales, charges its prices, and manages deliveries. This is where most large brands, such as Samsung and Nike, would normally deliver to Amazon.
Sellers practicing the 3P technique use Seller Central to post and sell their products on Amazon’s market. Suppose the seller to major brands, or individual side projects, may select their price and branding policy.
They do their order delivery (Buyers can choose to provide shipments themselves (FBM) or send their product to Amazon warehouses to be fulfilled using the FBA (Amazon’s Fulfillment by Amazon).
Understanding this split is key: Amazon is a retailer as well as a marketplace that has a separate impact concerning pricing, customer satisfaction, and vendor influence level.
- Vendor Onboarding Process: A Look Into Amazon’s Product Portfolio
It is not automatic to become a 1P or 3P vendor. Amazon is very cautious when choosing its suppliers – the 1P vendor group is paid close attention to.
In a 1P environment, Amazon usually chooses vendors based on their sales performance, brand recognition, or the creativity of their product. The first steps in onboarding include uploading product information, making sure that barcodes are used, checking that guidelines are followed, and finalizing pricing. By doing so, Amazon follows up by ordering bulk products.
Amazon’s 3P vendor path presents easy entry and approval. Although any person can enroll, customers must succeed in the 3P marketplace with high standards of inventory accuracy, quick fulfillment, and support. Amazon regularly measures the performance of 3P sellers based on major indicators such as late ship rates and order defect percentages.
Because of this vetting process, your Amazon cart is stocked with only those products that have passed rigorous operational tests. For a retailer, this process can be implemented through the use of an RFID solution for retail, and through that, one can have the advantage of implementing this technology in their business.
- How Amazon Connects With Vendors
After onboarding, Amazon is demanding a full integrated system from vendors. Vendors connect their inventory and shipment systems directly to the retailer’s backend systems through the use of APIs, EDI, and specialized portals by Amazon.
The following factors are essential to note, as they can be implemented in other businesses that work with other vendors in their distribution systems.