You won’t find Amazon.com on any “Top 25 3PLs” list, but the company is a leading 3PL in my book (no pun intended).
I recently read a Businessweek article on “customer service champs” and Amazon.com was ranked number one. The article highlights how Amazon not only focuses on providing consumers with the best possible buying experience, it also strives to provide merchants who sell on the site with excellent service too. One example is “Fulfillment by Amazon,” a service the company launched in 2006 where merchants “send inventory directly to Amazon where it is stored and managed in a secure, climate controlled facility. When orders are received, Amazon…professionally pick[s], pack[s] and ship[s] the product directly to [the merchant's] customer.” According to the article, Amazon shipped 3 million units for Fulfillment by Amazon customers in Q4 2008, up from 500,000 shipped the previous year.
What I find unique about this service is that its value proposition is centered on customer satisfaction, where the customer is not just the merchant, but the merchant’s customer too. “I can’t deliver the kind of customer experience that Amazon can,” is how one merchant using Fulfillment by Amazon summed it up (the service will also save them between $550,000 and $700,000 this year, primarily because Amazon can negotiate lower shipping rates).
I believe there’s a lesson here for other logistics service providers: expand your definition of customer, and include providing excellent service to your customer’s customer as part of your value proposition. So, if you’re providing logistics services to P&G, for example, think about how, as part of that engagement, you can also provide excellent service to Walmart, Kroger, and P&G’s other important customers. A positive experience for Walmart could translate into more business for P&G, which in turn could translate into more business for you, not only from P&G, but also Walmart.
Here’s the way Jeff Bezos at Amazon sees it: “[Fulfillment by Amazon] is important because it improves the consumer experience so much. It doesn’t make us more money [directly]; it’s heavy lifting. If you think long-term, I think it’s very important for us.”
Think long-term.
In other words, by providing your customer’s customer with an excellent experience today, they could become your customer tomorrow. This is the main reason Amazon provides fulfillment services to other merchants. Someone who buys from one of these merchants today and has a positive experience is likely to come back to the site tomorrow and buy something from Amazon.
Okay, I know there are differences between B2C and B2B operations, and that the devil is always in the details. But my main point today is that 3PLs should take a step back and ask themselves some important questions: Who is our customer? What does “customer service” mean to us? What does it mean to our customer, and to our customer’s customer?
There are other lessons worth discussing, such as Amazon’s use of technology, but I’ll save those for another day. In the meantime, have a great weekend. And I hope the sun is shining where you are.
