September 19 2006

[Editorial] "Fulfilment by Amazon" - no longer just for M&S

Amazon have launched a packaged solution for SMEs which provides warehousing, consolidated deliveries and fulfilment - a sort of 'M&S lite' Amazon backend for the 'little guy'. Currently in the US only the clock's now ticking until the UK's SMEs can access 'amazonian' logistics...

I'd expected that the development of the Amazon Services would hop from one Blue Chip company to another, based upon the eminent references that M&S would no doubt provide. This "productisation" (excuse the term - it is an American offering however...) has therefore come as a surprise to your Editor. A pleasant surprise, but a surprise nonetheless.

SMEs are however an interesting market. They are approaching the integrated retail space with a less-inflexible infrastructure than many large retailers and a great ability to be flexible and fit to Amazon's offered service.

SMEs' current infrastructure is often a matter of combining existing publicly-available services - they have had no favours and limited customisation. A typical setup would be an off the shelf software setup, with order processing and stock management hung off the main financial or accounting software. Spreadsheets and manual workflows connect marketing and business operations with the fulfilment capabilities of a mailing house or the beloved Post Office. SMEs have learned to combine the requirements of each "interface" themselves - for example, the Post Office or UPS tell you how to use them, rather than bend their own processes to suit you!

For the SME, then, using Amazon's setup and complying with their requirements is not going to be objected to as a matter of principle.

Insofar as changes or effort are required then the decision cycle and implementation in an SME is more direct that a large corporate.

Curiously, then, this new service from Amazon could be a major hit with SMEs.

There's still going to be a need for the SME to have a commercial software system for stock and sales management - and to handle the flow of information to and from Amazon's systems. There's no information on this available at present, but we'll return to this story as and when the service is made available in the UK and look at the practicalities.

Amazon don't have the market to themselves, of course. We covered a while ago the launch of the e-logistic offering and there are of course others. The Amazon brand will no doubt offer a major advantage in terms of customer acquisition.

For larger, established retailers this 'step up' for smaller retailers and a further offering from Amazon (consolidating their position as the 'merchants general' of the web) can not be cheering, despite the double-digit growth being reported across the Digital High Street. While SMEs are getting at last a fast track to etail, established players are wrestling their infrastructures into a shape that's fit for e-purpose.

M&S's efforts with Amazon are clearly of a major and difficult scale but the hope must be that the resulting "integrated multichannel" backend will support 'integrated multichannel retail'.

The difficult and expensive truth facing other large players however is that the cheap, 'web as service', off-the-peg options could not support their businesses and the root and branch overhaul of all major business systems is not on the Board's agenda for at least another two to three years. By then more radical items may also be on that agenda.

For now, most retailers will look on in pained envy and struggle along making piecemeal improvements. Each announcement of this type merely adds features to the functional requirements for The Perfect eCommerce System - further pushing delivery of that impossible dream further into the future!

Ian Jindal. Press release is reproduced in full below:

Amazon Launches New Services to Help Small and Medium-Sized Businesses Enhance Their Customer Offerings by Accessing Amazon's Order Fulfillment, Customer Service, and Website Functionality "Fulfillment by Amazon" Makes It Possible for Amazon.com Customers to Receive Benefit of Amazon.com Shipping Offers When Buying from Third-Party Sellers SEATTLE--(BUSINESS WIRE)--Sept. 19, 2006-- Amazon Business Solutions today launched "Fulfillment by Amazon" and "WebStore by Amazon," giving small and medium-sized businesses access to Amazon's order fulfillment, customer service, customer shipping offers, and underlying website technology to improve the experience they offer their customers. Fulfillment by Amazon Fulfillment by Amazon allows businesses to use Amazon's own order fulfillment and post-order customer service infrastructure, and allows Amazon.com customers to receive the benefit of Amazon.com shipping offers when buying from third-party sellers who use Fulfillment by Amazon. Amazon.com customers can now use offers such as Amazon Prime and Free Super Saver Shipping when buying products with the "Fulfilled by Amazon" icon next to the offering listing. "We created Fulfillment by Amazon because it is good for Amazon.com customers, and therefore, great for our third-party sellers," said Joe Walowski, Product Manager, Fulfillment by Amazon. "With membership in Amazon Prime growing every day, more and more Amazon.com customers want a great deal on shipping and to receive their orders quickly. Fulfillment by Amazon makes it possible for sellers to offer Amazon.com customers this convenience." For a handling fee as low as $0.50 per item plus $0.40 per pound and a storage fee of $0.45 per cubic foot per month, Fulfillment by Amazon frees online sellers from the time and money required to store, pick, pack, ship, and provide customer service for the products they sell online. Businesses simply send their products to an Amazon fulfillment center where Amazon stores and sends those products to customers who order them on Amazon.com or the business's WebStore (see "WebStore by Amazon" below). Amazon will also manage post-order customer service such as customer returns and refunds for businesses that use Fulfillment by Amazon. "We are excited about the possibilities of Fulfillment by Amazon for our children's product line 'The Faery Folk dolls.' For small manufacturers of unique products like us, one of the greatest challenges is getting the product to the consumer in a cost-effective manner. The overhead costs of pick-and-pack for one-off orders drains time and resources away from the important tasks of marketing and business development. Fulfillment by Amazon alleviates this issue by acting as the small business owner's fulfillment house at an acceptable price point," said Charles Erdman, co-founder and president of Dervish Media and Dervish Toys. "With a rapidly growing brand and product line, execution is critical for our business, which is why we're so optimistic about the impact Fulfillment by Amazon can have on our business." WebStore by Amazon WebStore by Amazon allows businesses to create their own privately branded e-commerce websites using Amazon technology. Businesses can choose from a variety of website layout options and can customize their sites using their own photos and branding. For example, Seattle Gift Shop now has its own WebStore at www.seattlesgifts.com. WebStore by Amazon users pay a commission of 7 percent (price includes credit card processing fees and fraud protection) for each product purchased through their site and a monthly fee of $59.95. "Not only has using WebStore by Amazon increased my sales dramatically, but its easy-to-use tools give me complete control of the look and feel of my site," said Kathy Wojtczak, who manages www.elementjewelry.com using WebStore by Amazon. "Plus, I can use WebStore by Amazon to track and manage all of my online inventory and sales in one place." WebStore by Amazon allows businesses to: * Maintain their brand while leveraging Amazon's own scalable, reliable, and secure back-end technology. * Make it secure, simple, and easy for visitors to buy using their existing Amazon.com accounts. * Earn additional revenue by including other products from Amazon.com in their WebStore and referring customers through the Amazon Associates program. "Day-to-day mission-critical functions such as handling sensitive payment information and making sure our websites can handle big spikes in traffic are fundamental pieces of Amazon's business. We've made significant investments over the past decade and employ world-class software engineers to make sure these things are done right," said Tim Mirick, Director, Amazon Business Solutions. "WebStore by Amazon now puts these people and this investment to work for sellers, so they can focus on what they do best-building their brands and managing their merchandise." Both Fulfillment by Amazon and WebStore by Amazon are available today in beta. They can be used separately or together. Go to http://www.amazonservices.com/businesssolutions for more information, including information on how businesses can sign-up for these new services. About Amazon Services & Amazon Fulfillment Services Amazon Services, LLC is a subsidiary of Amazon.com, Inc. (NASDAQ:AMZN) that offers the technical platform, operational capabilities and e-commerce expertise that power Amazon.com to other businesses seeking to create a world-class, cost-effective e-commerce offering for their customers. Amazon Enterprise Solutions and Amazon Business Solutions are Amazon Services groups. Amazon Enterprise Solutions works with large retailers such as Target, Bebe, and Marks & Spencer (UK) and the Amazon Business Solutions works with small to medium-sized businesses. Amazon Fulfillment Services, Inc. is a subsidiary of Amazon.com, Inc. that operates U.S.-based fulfillment and customer service networks for Amazon.com and the businesses that leverage fulfillment or customer service as part of their offering from Amazon Enterprise Solutions or Amazon Business Solutions.