With the aim of solidifying its position in US retail, Amazon is working closer than ever with its suppliers via its new program, Vendor Flex.
Amazon, apparently not satisfied with its extensive network of massive distribution warehouses, is now reportedly moving in on the warehouses of key suppliers with Vendor Flex.
According to The Wall Street Journal, the system is already in use with Procter & Gamble (P&G); the move has been made to reduce costs and shipping times and thereby strengthening the e-commerce giant’s position in the US market. Although still in its early phases, Amazon is still expanding its arrangement with P&G, while also cementing deals with the warehouses of Seventh Generation, Kimberly Clark and Georgia Pacific.
The Journal‘s description of the arrangement sees a small number of Amazon employees placed within the supplier’s warehouse. As Amazon fulfilment orders arrive, the supplier’s staff hand requisite stock over the their Amazon counterparts for packing and shipping.
This arrangement may have begun as early as three years ago with P&G, while one source is cited as saying that Amazon is now operating within at least seven P&G distribution centres worldwide. Unfortunately, both Amazon and P&G have declined to comment on the situation.
It’s clearly a tidy proposition for both Amazon and its suppliers, as both realise a reduction in costs and Amazon has the added benefit of gaining even more control over its supply chain. By the same token, deals like Vendor Flex make it extremely hard for other retailers to compete against Amazon.
However, from the sound of things its not the other US retailers that Amazon needs to be concerned about. With the Chinese-based Alibaba group of companies on the rise, it won’t be long before Amazon is going head-to-head against its Eastern analog.