PO

In Amazon’s Vendor Central (1P) business model, the PO is the foundation of all procurement activity. Once a PO is issued and confirmed, the vendor is responsible for fulfilling it according to Amazon’s operational and compliance standards (packaging, labelling, routing, delivery).

How It Works:

1. PO Creation: Amazon’s systems automatically generate POs based on forecasted customer demand, sales trends, and inventory levels.
2. PO Transmission: Vendors receive POs through Vendor Central, EDI (Electronic Data Interchange), or API.
3. PO Confirmation: Vendors must confirm each PO within the required time window (usually 24–48 hours).
4. Fulfilment: The vendor prepares, ships, and delivers goods according to the PO’s delivery window and Amazon’s routing instructions.
5. Receipt & Payment: Once Amazon confirms receipt at the fulfilment centre, the PO transitions to “Shipped” status, and payment is made per agreed payment terms (e.g., Net 60).

Key PO Data Fields:

• PO number (unique identifier)
• Vendor name and ID
• ASINs / product SKUs
• Quantity ordered
• Unit cost and total cost
• Ship-to location (FC or consolidation centre)
• Delivery window and routing details

Benefits for Vendors:

• Forecast clarity: POs reflect Amazon’s demand forecasts and inventory plans.
• Operational structure: Provides clear timelines and quantities for production and delivery.
• Financial predictability: Ensures traceable sales and payment cycles.

Benefits for Amazon:

• Inventory control: Maintains optimal stock levels across fulfilment centres.
• Procurement efficiency: Automates sourcing through data-driven demand planning.
• Legal accountability: Creates clear vendor obligations for quality and delivery.

Challenges:

• Strict compliance: Late confirmations or shipments may trigger chargebacks (e.g., PO On-Time, ASN, or Labeling chargebacks).
• Forecast volatility: POs may fluctuate with demand, creating planning challenges for vendors.
• Short lead times: Vendors must align PLT (Procurement Lead Time) and VLT (Vendor Lead Time) to meet PO windows.

Why It Matters:
The PO is the starting point of the Amazon supply chain for 1P vendors. Every inbound, financial, and operational process — from shipping to invoicing — depends on accurate, timely PO handling.

Example:
Amazon issues PO #DE1234567 to a kitchenware vendor for 2,000 units of a stainless steel pan at $15 per unit, with delivery to Amazon’s FC in Bad Hersfeld, Germany, between March 10–15. The vendor confirms within 24 hours and ships accordingly.

In short:
PO (Purchase Order) is a formal buying document through which Amazon orders goods from a vendor - defining products, quantities, prices, and delivery details, and serving as the basis for fulfilment, payment, and performance measurement.