A couple of weeks ago, we talked about The Amazon Effect and how it affects 3PLs. This week, we return to Amazon as the giant online retailer announced its launch of Amazon Elements, “a new line of premium, everyday essentials with transparent origins” in a recent press release.
The press release states that information such as “where items were made, why each ingredient was included, where the ingredients were sourced and much more” will be offered to Amazon Prime members. Furthermore, each package obtained from this new service will contain a unique code that can be scanned through an Amazon shopping app to track its specific ingredients and their origins, its date and place of manufacture, date of delivery, and ‘best by’ date.
Bringing Light to Something that is Already Happening
On the surface, what Amazon Elements is offering isn’t new. Other supply chain dependent companies have been offering similar levels of transparency for years. For example, Switcher, a Swiss textile company, labels each of its products with a code so that its customers can enter at the website to retrieve information about every firm and factory along the supply chain while also looking at the environmental performance certificates.
There’s also the Massachusetts Institute of Technology’s supply chain-friendly tool Sourcemap which is described as “the social network for supply chains” offers a very similar service to Amazon Elements (except it isn’t locked to Prime members and it doesn’t only cover diapers and wipes) as it too offers customers the ability to see the complete supply chain for a product or company. It also has the added benefit to calculate the potential impacts on the entire supply chain in the event of natural disasters or political unrest.
So why then does Amazon’s announcement merit any press interest let alone any from anyone in the logistics industry?
The answer is that unlike the efforts of other companies which have transparency as a value-added part of production, the transparency is the product when it comes to Amazon Elements.
Although supply chain transparency is important as demonstrated in classic case of Upton Sinclair, or the more recent crisis of Lululemon, many companies are still luke-warm on the idea.
This is because historically, both customer and retailer largely didn’t care about the history of an item. They were content that it was reasonably priced for what it is. The production and supply chain behind it was effectively invisible. Even if a business wanted to be transparent with its supply chain, it was incredibly difficult outside of its immediate suppliers due to technological and resource limitations.
Going back to Amazon Elements, Amazon is testing what sort of ROI it will get by selling transparency. The actual diapers themselves are more expensive than those on offer by their competition. However, Amazon has seen the move by supply chains in recent years from invisibility to transparency and its ready see how much it can capitalize from this trend.
Steve New, a writer for The Harvard Business Review puts it best when he describes the opportunities available to firms that make the switch,
As customers take greater interest in the origins and authenticity of the things they buy, providing them with tools to track provenance will become an important part of the marketing mix and will give producers and retailers new ways to capitalize on brand value. A key consideration is how much data to make publicly available, and in what degree of detail. Many firms have made bold assertions about how seriously they manage their supply chains. Transparency, at a granular level, gives credibility to those claims.
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