Amazon Supply Chain Explained: The Process, and Technology Behind It

The Amazon supply chain is one of the most sophisticated logistics systems in the world, trimmed with new age technology, which solely strives to deliver products at unparalleled speed. 

Even their mission statement claims that they specifically aim “to be Earth’s most customer-centric company”.

From sourcing to last-mile delivery, Amazon supply chain management integrates inventory management, warehousing, robotics, AI-driven inventory forecasting, and advanced transportation networks to uphold an example of operational excellence. For sellers, it means scaling their business faster with leaner operational responsibilities, without building costly logistics themselves.

This article explores the supply chain strategy of Amazon, examining fulfillment models, global expansion, and the innovations driving the future of the supply chain of Amazon.

What is Amazon supply chain?

The Amazon supply chain is the powerhouse behind the company’s ability to execute lightning-speed delivery. In simple terms, the supply chain at Amazon covers every step, including, 

• sourcing, 
• warehousing, 
• inventory management, 
• order processing, 
• pricing, 
• delivery, and 
• returns. 

According to Statista, about 61% of Amazon’s sales come from third-party sellers, making Amazon supply chain management a complex mix of in-house operations and seller partnerships.

The supply chain strategy of Amazon revolves around two main fulfillment models: FBA (Fulfillment by Amazon), where Amazon stores, packs, and ships orders for sellers, and FBM (Fulfillment by Merchant), where sellers handle storage and shipping themselves (we’ll elaborate on this in the following segment.)

The Fulfillment Process

The supply chain at Amazon is built to ensure that every order processed flows through a highly optimized fulfillment chain, designed to minimize friction.

Inventory and Storage

Inventory readiness is the foundation of Amazon supply chain management. Amazon can store products at Amazon’s own fulfillment centers (via FBA), you, as a seller, can choose to prefer own warehouses, or the products can be stored with third-party logistics providers. 

The supply chain strategy of Amazon is primarily concerned with the inventory being positioned close to demand hubs, which ultimately reduces last-mile delivery times. As a byproduct, Amazon supply chain issues like delays or stockouts are prevented.

According to Reuters and The Sun, Amazon is investing $4 billion to further expand its delivery network into 4000 rural areas by the end of 2026, tripling its infrastructure and offering users same day or next day delivery, which is mostly limited in cities. This initiative will serve over 13,000 ZIP codes in total.

Order Placement

In the Amazon supply chain process, order placement is often the result of a perfect blend of marketing, product listing optimization, and brand reputation. It starts once a customer clicks “Buy Now,” and it is when the supply chain of Amazon springs into motion, algorithms instantly search for the nearest fulfillment center with available inventory, trigger robotic picking and packing, and coordinate with carriers.

Prep to Ship

Once your order is picked from storage, it enters the “prep to ship” phase, the final stretch inside the Amazon warehouse where it makes sure everything is correct, protected, and ready to move.

Picking

Inventory items are located within the warehouse, scanned, and verified. This is where Amazon supply chain management leverages robotics to reduce human error. Robots transfer items to “pick stations,” where associates (a.k.a. pickers) grab the exact product you ordered. On average, a picker working with robots can handle 300–400 items per hour, almost triple what they could do on foot, because the shelf literally comes to them instead of the other way around.

Seller Insight: Here, you need to ensure your inventory is well-labeled, accurately categorized, and properly packaged according to Amazon’s FBA guidelines. This minimizes mismanagement or wrong picking and thus prevents delays. Bundled or multi-item products should be packaged in a way it is easy for Amazon associates to avoid confusion.

Quality Checks

To keep everything running smoothly, Amazon constantly checks that items are in good condition. Automated damage detection systems are 3x more accurate than human inspection to catch any faulty products before they leave the building. This is aimed at protecting goods, minimizing waste, and aligning with the company’s sustainability goals.

Seller Insight: Consider inspecting batches before shipping them to FBA. This reduces returns or customer complaints. Also, label fragile items clearly and use recommended packaging to avoid damage in transit.

Packing 

When the items reach the packing station, algorithms decide the perfect box size and even calculate exactly how much tape to use. This saves time, reduces waste, and supports Amazon’s push toward sustainability all to abide by their guidelines. 

The company says it’s cut packaging waste by 43% since 2015. Sometimes, third-party products ship in their original boxes, but even those vendors have to follow tips from Amazon on how to cut down excess packaging and align with the requirements. 

Shipping

Orders, at this point, are handed off to Amazon alternatives like UPS, FedEx, USPS, or Amazon’s own delivery fleet, a key segment of the supply chain strategy of Amazon. Amazon works with 3PLs that give it more control over delivery reliability.

NOTE: Fast and error-free delivery increases your chances of winning the Buy Box.

In essence, the supply chain management of Amazon is a seamless orchestration of storage, routing, and delivery, which is executed meticulously at a scale few others can match.

Seller Fulfillment Models in Amazon’s Supply Chain

If you’ve ever wondered how does Amazon supply chain work so seamlessly that millions of orders arrive in just a day or two? Well, the secret lies in its flexible fulfillment models. 

The supply chain at Amazon is a network of strategies that sellers can tap into based on their business goals, product type, and operational capacity.

Fulfillment by Amazon (FBA)

Think of Fulfillment by Amazon (FBA) as handing over the heavy lifting to Amazon. This is why it’s the choice of nearly 73% of the top 10,000 Amazon sellers. When you opt for FBA, your inventory goes into Amazon’s warehouses, and from that moment, Amazon supply chain management takes over and covers for you, starting from storage, picking, packing, shipping, to even customer service. It’s indeed the backbone of Amazon’s supply chain strategy. 

Only when you opt for FBA do you receive your Prime eligibility badge. The trade-off here is the hefty fees and less control over your storage costs. So, it is only preferred if you have ample funding and a greater profit for each sale. Also, the Prime badge can increase conversion rates by up to 50% because customers prefer faster delivery.

Additional read: Amazon FBA Fees Explained: What You Should Know

FBA Onsite Program (Hybrid)

This is Amazon blending its supply chain strategy with your own space. This hybrid process is often preferred by large-scale sellers with their own warehousing. FBA Onsite lets you leverage Amazon’s supply chain management tools but frees you from the high storage fees of Amazon fulfillment centers. 

It can be a good choice for businesses with fast-moving SKUs, as sellers with high turnover rates who want Prime badge can also benefit from it.

Say you’re an enterprise seller with high-turnover SKUs or facing seasonal selling spikes (e.g., apparel or toys during holidays) you can use this model to avoid Q4 storage surcharges.

Fulfillment by Merchant (FBM)

Here, supply chain management of Amazon business is completely in your hands. You do the required procedure yourself or via a third-party provider. It’s ideal for sellers with unique packaging needs, slower-moving inventory, or those navigating Amazon supply chain issues like peak-season storage limits. 

They also manage customer service and the return process in-house. This model is often suitable for sellers aiming for higher-margin per unit products, oversized items, or businesses with established logistics capabilities or unique handling requirements.

Multi-Channel Fulfillment (MCF)

MCF is Amazon’s solution to  “omnichannel” selling. You can use Amazon supply chain infrastructure to fulfill orders from eBay, Shopify, or your own site. Although the idea might be appealing, branding control can be tricky for you. Ultimately, the costs might outweigh the benefits for lower-margin products.

But on the brighter side, a Shopify-based DTC brand can fulfill orders through MCF to offer next-day shipping without building its own warehouse network.

In the end, each model plugs into the supply chain strategy of Amazon differently.

Amazon Fulfillment Infrastructure (Layers of Amazon Supply Chain)

In this section, let’s unpack how the supply chain at Amazon works and why it’s a benchmark for global commerce.

Amazon Fulfillment Centers

Amazon’s fulfillment centers are enormous. Inside, the whole operation runs like clockwork. Shipments roll in from vendors, products get stashed in spots that might look random to us (but the algorithms know exactly where everything is), and orders are picked, packed, and shipped with a tag-team effort between people and robots.

Types of Amazon Fulfillment Centers 

Here are the types of Amazon Fulfillment Centers that add up to the Amazon Supply Chain infrastructure:

Fulfillment Center Type	Purpose / Products Handled	Key Features	Seller Benefits
Standard Fulfillment Centers (FCs)	General merchandise: books, electronics, toys, home goods	Large-scale warehouses, robotics, conveyor belts, automated storage	Best for fast-moving products; FBA inventory hub; enables scalability
Sortation Centers	Route packages by ZIP code for final delivery	Pre-sorts parcels before handoff to last-mile carriers	Faster deliveries; reduced shipping costs; better customer experience
Delivery Stations	Last step before customer delivery	Local hubs; Amazon drivers handle last-mile delivery	Enables same-day & next-day Prime delivery; increases customer satisfaction
Specialty Fulfillment Centers	Apparel, shoes, toys, hazardous materials	Hanging racks, garment bags, hazard-compliance packing systems	Protects sensitive categories; reduces damage/returns; meets compliance standards
Fresh & Perishable FCs (Amazon Fresh / Pantry)	Groceries, perishables, household essentials	Temperature-controlled storage; specialized fresh picking	Safe, fast delivery of perishables; access to high-demand grocery/household customers
Fulfillment Center Plus / FBA Onsite	Hybrid: Seller warehouse + Amazon fulfillment	Uses seller’s own storage but integrates Amazon’s tools	Lower storage fees; keeps Prime eligibility; ideal for high-turnover SKUs

Amazon Delivery Fleet

While many may have the perception of Amazon supply chain as purely warehouse-driven, its delivery fleet is just as strong. Amazon uses a blend of:

• Amazon-branded vans and trucks for middle-mile and last-mile transport.
• Air hubs and Amazon Air cargo planes are to cover long distances quickly.
• Amazon Flex drivers who are contractors who use their personal vehicles to deliver packages.

This flexibility sets up the supply chain strategy of Amazon for success which can handle peak demand pressure, without relying solely on third-party carriers.

Delivery Options & Innovations

Part of Amazon supply chain management is constant innovation in how deliveries happen:

• Same-Day & One-Day Delivery in select regions, powered by micro-fulfillment centers close to city hubs.

• Amazon Prime Air (Drone Delivery) which is still in testing phases but designed to revolutionize rural and remote area delivery.

• Amazon Scout, which is an autonomous delivery device for contactless doorstep drops.

• Amazon Fresh & Whole Foods Delivery integrating grocery supply chains into the main network.

This level of diversification addresses Amazon supply chain issues like seasonal surges and urban congestion, ensuring the customer experience remains seamless.

Amazon Delivery Service Partner (DSP) Program

The Delivery Service Partner Program allows businesses to operate and deliver under the Amazon brand. This is where managing teams of drivers with Amazon-provided routes and vans becomes the focal point. 

For partners, it’s a low-barrier way to launch and grow a logistics business without the massive upfront investment. For Amazon, it’s a smart way of expanding delivery capacity quickly, staying flexible in high-demand seasons, and all of that without the responsibility of owning every vehicle and employing every driver directly.

Amazon Hub, Locker, and Key

Beyond home delivery, the supply chain of Amazon includes secure pickup and return points.This adds flexibility to the services.

Amazon Hub Lockers  

These are self-service kiosks located in convenience stores, malls, and apartment complexes.

Amazon Hub Counters 

Partner retail locations where packages can be collected or returned.

Amazon Key 

Smart lock technology allowing couriers to deliver directly inside your home, garage, or car trunk.

These innovations reduce failed delivery attempts, increasing the efficiency of the Amazon supply chain overall. A subtle but critical part of how the Amazon supply chain works.

What makes the supply chain management Amazon operate with such resilience is its hybrid approach. 

Amazon Supply Chain Advantages

For sellers, understanding how it works can reveal exactly why products with Prime can dominate the buy box and customer loyalty.

1. Strategic Warehousing

With more than 175 fulfillment centers worldwide and hundreds of other specialized facilities, the company stores inventory as close as possible to the buyers considering their demand according to geos.

Different facilities for different needs

From sortable centers for small goods to non-sortable centers for bulky items, each center is optimized for speed and handling efficiency. These centers streamline regional delivery, receive centers handle bulk inbound stock, and delivery stations focus solely on last-mile delivery.

Randomized storage, maximum efficiency

Instead of storing by category, Amazon scatters products into bins and lets algorithms track their exact location. This speeds up picking and ensures no shelf space is wasted.

Predictive stocking

By using big-data analytics, Amazon pre-stocks seasonal or high-demand items near the customers who will order them, which means buyers’ winter gloves might already be sitting in a fulfillment center close to Chicago before the first snow falls.

2. Advanced Automation and Robotics

Amazon’s fulfillment centers are where human skill meets robotic precision. Over 750,000 robots now work alongside associates, shaving seconds off nearly every step in the process. So here are some facts that you must know. 

• The Kiva/Amazon Robotics system flipped the script on picking now shelves come to pickers, tripling productivity.
• From Sequoia (inventory storage) to Sparrow (product sorting) and Titan (moving bulky goods), each robot has a specialty that cuts down on time and errors.
• Automated systems are 3x more accurate than human inspectors at catching defective products.
• Box sizes are calculated algorithmically, reducing waste and lowering costs which is a small step that adds up to big efficiency gains across millions of orders.

3. Flexible and Fast Delivery Models

By combining its own logistics network with select 3PL carriers, it can offer shipping speeds competitors struggle to match.From standard Prime two-day delivery to Prime Now two-hour delivery and even same-day shipping in select cities, customers now get to choose how fast they want their order.

Amazon controls everything from containers coming out of China to the final doorstep delivery, reducing operational bottlenecks and keeping shipping costs predictable. For sellers, all of these fulfillment advantages mean one thing, when your product is part of Amazon’s system, whether through FBA, Multi-Channel Fulfillment, or Supply Chain by Amazon it benefits from a logistics network built to make “fast delivery” feel instant.

Amazon’s global fulfillment strategy is more than just warehouses and trucks. From international marketplaces to regional systems like the European Fulfillment Network (EFN), every part is designed to keep deliveries moving at lightning speed without losing the reliability tag. In our next segment we’ll shed light on how Amazon supply chain is planning its global expansion.

Global Expansion of Amazon’s Fulfillment and Technology Driving Amazon’s Supply Chain

From Supply Chain by Amazon, which cuts cross-border costs by up to 25%, to the European Fulfillment Network, which simplifies selling across borders, the company’s infrastructure is changing rapidly. Let’s take a look at how.

Extensive Global Network

Amazon runs over 175 fulfillment centers worldwide, together covering more than 150 million square feet. Many are strategically placed near major cities so they can ship faster. Back in 1999, Amazon planted its first flag in Europe, and it’s been expanding ever since. 

The COVID-19 ecommerce surge only sped things up, with dozens of new facilities opening in the U.S. and beyond. 

In Canada, for example, Amazon announced five new sites in Quebec alone, sorting centers, delivery stations, the works, all to cut delivery times.

Supply Chain by Amazon 

Sellers can tap into Amazon’s storage, shipping, customs clearance, and inventory management, saving time and cutting costs. 

The numbers are eye-catching as it is up to 25% cheaper for cross-border shipping via Amazon Warehousing and Distribution (AWD) and up to 80% cheaper storage compared to FBA during peak season.

Vertical Integration in Logistics 

Amazon has been steadily building its own transport network to cut dependence on outside carriers:

Trucking 

Amazon has its own long-haul and last-mile trucks, is recruiting entrepreneurs to start Amazon-exclusive trucking companies, and is testing more sustainable fuels, like compressed natural gas (CNG).

Amazon Air 

A cargo airline with 70+ planes, designed for speed over breadth, flying direct routes to save time and costs. Amazon leases daytime space at DHL’s main U.S. hub and is building its own facility in Cincinnati. In Europe, it’s operating out of a new air hub in Leipzig, Germany.

Ocean Freight & Containers 

Amazon charters its own ships and manufactures 53-foot containers in China, keeping them in the U.S. to move goods domestically. Since 2017, it’s acted as a freight forwarder for Chinese sellers, moving tens of thousands of containers a month.

Drones (Prime Air)

In testing, these drones can deliver small packages in under 30 minutes within a 10-mile range of a fulfillment center.

Amazon Supply Chain in International Marketplaces

From amazon.com in the U.S. to amazon.in in India, amazon.de in Germany, and amazon.ae in the UAE, each marketplace operates locally while tapping into Amazon’s shared global infrastructure.

Amazon Global Logistics (AGL) specializes in moving goods, especially from China and Hong Kong, to Amazon warehouses in the U.S., UK, and Europe. It handles pickup, paperwork, customs, freight, and delivery, all booked and tracked inside Seller Central. You can get up to 25% off on cross-border shipping to AWD.

European Fulfillment Network (EFN)

EFN is Amazon’s way of making cross-border sales in Europe simple. Sellers store inventory in one European country, and Amazon ships orders across the region without the seller having to set up multiple warehouses.

Along with EFN warehouses, Amazon has expanded its European operations to include an air hub in Leipzig, Germany, tech hubs in London and Edinburgh, and a drone development team in Cambridge, all designed to keep the network fast, flexible, and ready for future growth.

Customer Service and Returns

When people talk about the Amazon supply chain, they usually rave about how fast Prime packages land on doorsteps. But here’s the thing, speed is only half the magic. The other half is the ease with which Amazon handles returns. 

Return Options

Amazon has reduced the stress of returns with multiple, flexible options.

Category	Details
Drop-off Locations	Customers can return items at Amazon Hub Lockers, Whole Foods, UPS Stores, or partner locations and often without boxing the product themselves.
Prepaid Shipping Labels	Amazon provides a prepaid return shipping label that customers can print at home or receive by email.
No-Box, No-Label Returns	For eligible products, customers can simply hand the item over at a designated location, no tape, no labels, no forms required.
FBA Returns Management	For Fulfillment by Amazon (FBA) sellers, Amazon handles the returns process including receiving, inspecting, refunding, and restocking products.
24/7 Customer Service	Amazon offers round-the-clock, multilingual customer support for order issues, product concerns, and general inquiries.
Automated Refund Processing	After inspection, refunds are processed quickly, often before the package reaches the warehouse.
Performance Insights	FBA sellers receive detailed reports on return reasons, defect rates, and customer feedback to help improve quality.

How 2025 Tariffs Are Affecting the Amazon Supply Chain

Although Amazon supply chain is indeed one of the most efficient in the world, its not immune to global trade disruptions. The tariff changes in 2025 is reshaping how inventory flows through Amazon’s network, directly affecting fulfillment costs. Let’s take a look at how its impacting the experience for sellers.

Rising Inbound Costs

Importing to Amazon fulfillment centers (via FBA or Supply Chain by Amazon) has become significantly more expensive. Regardless of importing test batches or restocks, sellers will be subjected to equal fees. This may push people into overstocking in larger batches, but as a result of that, Amazon storage fees will rise for them. In this case, they’ll have to have a more in-depth outlook when it comes to Demand forecasts and reporting solutions to gauge the inventory movement better.

Shift in Supplier Base 

Many sellers were diversifying sourcing away from China to India, Vietnam, or Mexico to avoid steep surcharges after the initial announcement of de minimis exemption to be limited to non-Chinese sources. But now with the de minimis rule being revoked completely, sellers may have to divert to local manufacturers.

Higher FBM Risk 

When you run FBM (Fulfilled by Merchant), you’re responsible for importing goods. That means you deal with customs duties upfront. So, when tariffs spike unexpectedly, you absorb that cost yourself without any buffer.

When you use FBA (Fulfillment by Amazon), Amazon manages the logistics. So, once your goods are inside the Amazon supply chain network, Amazon allows it to consolidate imports, which can soften the tariff-per-unit impact and make the costs more predictable.

US Government Measures to Reduce Friction

Recognizing the chaos tariffs could bring especially to ecommerce businesses, the U.S. government levied a temporary fix

The Flat Fee Duty System 

For six months, instead of calculating duties per product, the government applied flat postal duties on small packages. $80–$100 for low-tariff items, $160–$200 for higher-tariff categories This was to keep the packages moving and uncomplicate the tariff calculation for sellers by giving them a predictable cost per shipment.

However, the grace period ended, and now all imports are taxed without de minimis exemptions. And larger, consolidated shipments via Supply Chain by Amazon or AWD have become more cost-effective than small-batch importing.

Final thoughts

The Amazon supply chain grows on the basis of data-driven decisions, predictive analytics, and vertical integration, making it a benchmark for modern commerce. And for sellers, the real advantage comes from knowing your inventory inside and out.

SellerApp’s inventory reporting comes in giving you clear, real-time insights on stock levels, turnover, and fulfillment so you can make smarter decisions, avoid stockouts, and stay in sync with Amazon’s pace.

However, the infrastructure Amazon brings to the table might seem undefeated from the surface, but it’s far from the truth. Amazon’s supply chain issues like global disruptions or seasonal spikes, take place constantly, which test the resilience of the supply chain management that Amazon has perfected over the decades.

Also read: Amazon FBA Inspection: A Comprehensive Guide

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