Online retail giant Amazon has registered its China arm as an ocean freight forwarder, the US Federal Maritime Commission has announced.
The move will give the retailer more control over shipping goods from its factories in China to customers.
By expanding its logistics operations in this way, the retailer can cut costs with the possibility of being in a position to offer third-party logistics services at a later stage.
In response to the news, Sian Hopwood, senior vice president for B2B operations at supply chain software supplier Kewill, commented, “Delivering products direct from manufacturers to consumers is not a new concept, but this is the first time we have seen this ‘drop shipping’ model on a global scale."
Retailers wanting to regain market share will have to step up their efforts to ensure they are able to respond more flexibly and responsively to demand - "importing stock as it is ordered rather than having to predict stockpiling requirements and risk warehousing unwanted items", added Hopwood.
“By removing the middleman, retailers can reduce costs and provide customers with an always-on, always-available shopping experience which traditional models can’t sustain."
With the retail environment still being in a state of flux with the rise of digital and mobile shopping, a key part of making this system work is visibility.
"If companies are to retain customer trust, they will need to have supply chain management solutions in place to ensure shoppers know exactly what’s happening to their shipment.”
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