Amazon's Top Suppliers and the Detailed Negotiation Facts

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Amazon
As the world’s largest e-commerce company, Amazon relies on many suppliers to make its operations possible. While the company seeks to maintain strong relationships with its suppliers, it does not enter into long-term arrangements and contracts with them. According to the company’s 2018 10K report, there was not a single supplier that accounted for 10% or more of its purchases (Amazon.com, 2018). The report points that given that Amazon does not have in place long-term arrangements with most of its suppliers, operations may be halted if top suppliers stop selling. Therefore, the suppliers are integral to the operations of the company. These top suppliers for the company include Applied Optoelectronics, Wellnet Corporation, Nautilus, United Natural Foods, Go Pro, TrueBlue, Lifetime Brands, Roku, and FitBit (Kim, 2017; Walton, 2016). The top 2 suppliers that this paper focuses on are Applied Optoelectronics and Lifetime Brands.
Applied Optoelectronics
Applied Optoelectronics is a Texas-based firm that deals with the designing, development, and manufacturing of communication equipment. Specifically, the firm deals with fiber-optic networking products, laser transmitters, as well as optical components and devices (Walton, 2016). The company has facilities in China and Texas that enables manufacture and supply products to Amazon. As noted its website, the company seeks to offer high-level performance and price competitiveness through its in-house components and design capabilities. The data center of the company allows Amazon to sell its cloud services. Despite this, Applied Optoelectronics has a low negotiation power with Amazon as it is the case with other suppliers. As noted above, Amazon does not enter into long-term arrangements with its suppliers. Amazon has a higher negotiation power on its side given that it maintains relationships with the customers who purchase the products of Applied Optoelectronics. In 2017, Applied Optoelectronics generated 58% of its revenu...