The Impact of the Amazon's Shipping Company Expansion

The Impact of the Amazon's Shipping Company Expansion
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Amazon serves a lot of customers through its e-commerce platform; apart from stationery and books, customers order groceries, electronics, equipment, machinery, and spare parts. Typical, a customer would place an order of items or items from the eCommerce platform, then it is the job of the Amazon logistics company to make deliveries. Before an item reaches the customer, a lot of movement happens behind the scenes. According to Connolly (2020), the supply chain at Amazon begins with third-party sellers creating a shipment. Amazon then picks up the shipment and delivers it to Amazon's fulfillment center. Associates at the fulfillment center then receive sort and scan the packages by unloading them. The received goods can be distributed to other fulfillment centers as well. When customers order items, they get sorted at the fulfillment center, and delivery is made one or two days later. Deliveries happen through cargo planes and delivery vehicles.
For the supply chain to have value, a proper internal control mechanism need to be in place. The internal control levels largely depend on management discretion. Doxey (2019) argues that the cost of the internal controls should not exceed the benefits derived from it. Internal control measures ensure that properly verified, valued, and correctly reported. Consequently, when these measures are in place, financial reports tend to reflect a true and fair view of the company's operations and worthiness. Therefore, Amazon’s internal control systems go a long way in safeguarding its complex supply chain, enabling it to operate with efficiency (Webb, 2007). With improved efficiency, the company is able to build a reliable supply chain, which earns the company more confidence. In the long run, trust translates into real profits.
Amazon’s operations have grown over time, and its coverage area has grown to be greater than that of many distributors, who turned out to be inept at shipping products to shoppers. Furthermore, in 2006, the introduction by “Fullfilled by Amazon” program 2006 where Amazon would take charge of the supply chain of independent sellers by allowing them to use its warehouses and supply chain networks (Girotra & Netessine, 2013). Therefore, the Amazon supply chain has become complex, serving a large number of sellers and buys across the globe. As a result, the company is forced to reinvent its business model. In the beginning, Amazon positioned itself as a wholesaler of goods. In 2013, the company had already prepared itself for expansion when it set aside $14 billion to construct 50 new warehouses. Through the reinvention of its business model, Amazon has been able to multiply its revenue-generating channels. Initially, Amazon sold books, but it became a go-to platform for groceries, electronics, food, machines, and equipment with time. With the expansion of warehouses and fulfillment centers, the company's revenue channels have increased, contributing to the company's financial success.
The expansion of Amazon's supply chain comes with huge financial commitments that have a huge bearing on the financial statement. The main purpose of being in business is to make a profit. Amazon's biggest concern should be whether the company is subjecting itself to supply chain risks that may later prove detrimental to the business. Brehm (2013) argues that there is no correlation between a manufacturer's total cost on a supplier with the profit loss. Therefore, Amazon's third-party sellers have an insignificant impact on its income statement. However, Brehm (2013) argues that low-cost items in the automobile industry have a high correlation with the profit loss of the concerned company. The pit hole here is the thought that high-value items that cost a massive amount of money bear the greatest supply chain risk. Amazon's...