Amazon European Logistics Buildout | In Practise

Amazon European Logistics Buildout

Former VP, Amazon Logistics Europe

Learning outcomes

  • Evolution of Amazon's European versus US logistics network
  • How inbound is organized and has adapted for FBA
  • Sorting and picking of both sortable and non-sortable products inside the warehouse
  • How vertical players could have an advantage over Amazon
  • Amazon's relationship and competition with carriers
  • Outlook on challenges for scaling Amazon and FBA

Expert profile

Philippe Hemard

Former VP, Amazon Logistics Europe

Philippe has spent over 25 years developing end-to-end logistics systems from vendors to customers, including 18 years at Amazon.com. He joined Amazon in France in 2000 as Distribution Centre General Manager, moving to Amazon.co.uk (Scotland) in 2004, to support business growth within the UK. Philippe then took up several senior leadership positions in European Operations at Amazon EU Headquarters in Luxembourg, culminating in the role of VP Amazon Logistics Europe from 2015-18. Before joining Amazon, Philippe worked for Danzas (now DHL) in France. Throughout his career he has worked on network modelling, procurement and buying processes, inventory management, fulfillment management, and transportation network management. Since March 2018 Philippe has run his own consultancy business, holds several board positions and teaches Supply Chain Management and Global Logistics Strategy at university. Read more

Philippe, a pleasure to have you with us. Could you provide some context to when you joined Amazon in 2000 and the state of the network, in Europe?

Back in 2000, we had just started in France. France opened 29th August, 2000. There were only two countries open, which were UK and Germany, which were both opened in 1998. When I say opened, it’s not really open, because Amazon bought two companies – one in the UK and one in Germany – to start up their business in those countries. In France, one of the particularities was that they couldn’t buy anybody because there was nobody to buy and, therefore, they started from scratch. At that time, we were only selling four products. Books, obviously, CDs, DVDs and software and video games. Those were the only things sold on Amazon, at that time, which was the case, by the way, everywhere in the world; in the US, the UK and Germany too.

Therefore, there were three websites and there were three fulfilment centers. One in the UK, one in Germany and the one that we had just opened in France, when I joined. I’d been hired to oversee the logistics for France and I set up the first fulfilment center and the first distribution network.

What are the specific differences between the way that Europe is structured, versus the US, in terms of logistics and networks?

Not too many, if you consider each country as a country. If you compare France and the US and UK and Germany, there is not much difference. Originally, there was one website, one fulfilment center. Now in the US, in 2000, in the US, there were maybe three or four fulfilment centers. There was Seattle, one of the historic ones. There was one Reno, in Nevada and there was one in Delaware, that I visited, when I joined. There were maybe one or two others, but no more than that. There was no difference in the structure. Each of the websites had their own catalogue and had each of the websites had one – or in the case of the US, several – fulfilment centers. In Europe, it was one for one; one fulfilment center per website. The products in the fulfilment centers were sent to everyone ordering on the website they had chosen. For example, if you were French and you wanted to buy on amazon.co.uk, you were able to do it. You had to log on to amazon.co.uk and you would receive, from the UK, the product that you bought. That was the structure and it was the same in Germany and in France.

Each website was sending all around the world, by definition. They were able to ship everywhere, but you had to go onto the website that you were sourcing the product from.

How has the network evolved, in Europe?

In Europe, it took almost 10 years, but we morphed it from this one to one relationship between the fulfilment center and website to the European fulfilment network, where every product in Europe could be seen in every website in Europe and could be fulfilled from any fulfilment center, in Europe, more or less. Of course, there were some restrictions. For example, with an electronic product, with a UK plug, you cannot sell that to continental Europe and vice versa. Also, when the product is not allowed to be sold, because it is not compatible in that market. But globally, at the large scale, I would say that it is a unionized market, where products are sold anywhere in Europe and fulfilled to anywhere in Europe.

Obviously, it started from the country’s structure and there are still huge ties between the website and the country fulfilment center, because you want to get the product closer to the customer, where they are buying from. Therefore, most of the French products are still in France and the same in UK and Germany. Now, also in Europe, two additional websites have been opened, in 2008 and 2009, in Italy and Spain, where we grew again. Some other websites have been opened, not necessarily with fulfilment centers, but fulfilled from elsewhere. The most recent one is the Dutch one, amazon.nl, where there is no fulfilment center, yet, in the Netherlands and most of the products come from Germany.

Is it very important to have a .nl website or a specific country website, in Europe, to give Amazon an advantage?

The only advantage is the language. That’s one of the big differences. If you want to compare the US and Europe, although Amazon talk about the US and Europe as regions, for Amazon, Europe is still an aggregation of countries. One of the big differentiators, is the language. We cannot have one website for all and it’s the reason we have those different websites. Where the Netherlands has been a very big customer, particularly from amazon.co.uk and some of the amazon.de, as well, because there are both some English and some German speakers in the Netherlands, for a long time, we didn’t think it was necessary for them to have their own website.

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Amazon European Logistics Buildout

May 10, 2020

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