Sarah Mallard Operation Management Spring 2014 Amazon.com’s European Distribution Strategy Analysis Executive Summary • Amazon was founded in 1995 by Jeff Bezos and became one of the first major companies to sell goods over the internet • Starting out as solely an online bookstore, Amazon has become the largest online retailer in the world. • It is divided into several independent organizations like Amazon Europe, Amazon US and Amazon Japan. • The major categories or modes of shipment for Amazon.com in the U.S. are drop-ship, split, partnered, and postal-injection. • The number of items in an individual order impacts Amazon.com’s order fulfillment. The number of items effects shipment because orders are sorted either single item orders or multi-item orders. • Also with U.S. operations, the type of product impact order fulfillment and shipment. Large and small item are never shipped together. • The primary factors Amazon Europe should use to direct the decision making about the EDN are network configuration, shipping processes, out of stock items, and customer satisfaction. • A new DC (hub, EDN) for Amazon Europe will impact on in-bound and out-bound shipments. An updated distribution configuration is needed to support its fast growth goal. • An implementation decision should be based on optimizing demand patterns, inventory and transportation costs, and Amazon Europe’s operations. • Using shipment attributes, identify the major categories, or modes, of shipment for Amazon.com in the U.S. Amazon.com’s US operation business model is based on “sell all, carry few”. Amazon offers consumers a wide selection of products while keeping inventories at low levels. A major interest for Amazon in the US is optimization of netwo... ... middle of paper ... ...pending on the country. Deciding on a 1 or 2 DC alternative may not be able to address the customization needed to serve different European areas. Amazon US has found success from optimizing their shipping process; due to the fact that there is only one postal service serving the entire nation. This is not the case in Europe. For two of the considered alternatives, increased delivery and lead time will occur due to distance between distribution center and customers. European postal carriers are fast but lack in cross border efficiency. Express delivery creates more uncertainty. Amazon Europe should consider making a partnership with international shipping companies, like UPS and FedEx, to receive a discount on high shipping fees while improve cross-border shipping difficulty. Delivery time and customer satisfaction are crucial for Amazon Europe’s success.
The most obvious technological advance that helped Amazon, and the one that launched the company, was the internet (Parnell, 2014). Jeff Bezos knew that he wanted to open an online business and decided to start with a bookstore due to low pricing and an existing worldwide demand (”Amazon.com, Inc. History”, n.d.). After deciding on a model, he chose Seattle as a home for his business due to its proximity to high tech workers and a large book distributor. The website opened with a database of more than one million titles, whereas many competitors only stocked 2,000, and the orders went directly to wholesalers. Amazon quickly expanded their database to 1.5 million books and started offering deep discounts which attracted many new customers.
It's important to realize that first and foremost Amazon.com is a technology company. Over the past years, Amazon.com grew from an online retailer into a platform on which more than 1 million active retail partners worldwide do business. Behind Amazon.com's successful evolution from retailer to technology platform is its SOA (service-oriented architecture), which broke new technological ground and proved that SOAs can deliver on their promises.
Jeff Bezo’s began Amazon in his garage in July 1995 with three Sun workstations setting on wooden doors for tables and extension cords running from everywhere (Academy of Achievement, 2010). Right from the beginning he was a visionary leaving his well paying job as a senior vice president with D. E. Shaw to begin Amazon.com (Academy of Achievement, 2010). Being the visionary that he is he saw an opportunity prompted by the huge growth rate of internet use in a single year and ran with it never looking back. Jeff realized that the internet had “no real commerce to speak of” so he began researching possible businesses (Academy of Achievement, 2010). “After reviewing 20 mail order businesses and deciding which could be conducted more efficiently over the internet than by traditional means he decided on books” (Academy of Achievement, 2010). He thought books were perfect because attempting to send huge catalogs for all the available books would be expensive and cumbersome, but an online resource database that was easy to navigate would provide customers with easy access and a single point from which to shop. “In 30 days, with no press, Amazon had sold books in all 50 states and 45 foreign countries, obviously by the success of Amazon he was right (Academy of Achievement, 2010). In a case study written by Javad Kargar called “Amazon.com in 2003” he stated that “Amazon's online store was a big hit, with about $5 million in the first year of operations” (2004). This huge success so quickly would have confirmed for Jeff that his idea was viable and drove him to continue to strive for more. Jeff Bezo’s charismatic-visionary leadership is the key to his and Amazon’s success.
Amazon’s macro-environment is made up of six external factors: political, economic, environmental, technological, social, and legal conditions. These factors are important because they shape how the company operates and you must know each piece to be able to compete within the retail and eCommerce industry. An evolving political factor are the efforts the government has made toward punishing offenders of cyber-crime. This kind of thief wasn’t walking into your store, but hacking into your computer. This type of crime wasn’t possible before the internet. The government has started to take these crimes more serious as technology evolves. Technology is a factor that Amazon.com must invest heavily in. They are reliant on having top of the line technology to survive against cyber-crime and to stay relevant in the tech world. ECommerce is everywhere now and competition is very high. This brings in legal conditions; Amazon must know what laws exist in which countries because they are a
Another part of Amazon’s retail strategy is to serve as the channel for other retailers to sell their products and take a percentage of cut of every purchase. Amazon does not have to maintain inventory on slower-selling products. This strategy has made Amazon a ‘long tail’ leading retailer, expanding its available selection without a corresponding increase in overhead costs.
Amazon Supplier Relationships Subject it to a Number of Risks. We have significant suppliers, including licensors, and in some cases, limited or single-sources of supply, that are important to our sourcing, services, manufacturing, and any related on-going servicing of merchandise and content. We do not have long-term arrangements with most of our suppliers to guarantee availability of merchandise, content, components, or services, particular payment terms, or the extension of credit limits. If our current suppliers were to stop selling or licensing merchandise, content, components, or services to us on acceptable terms, or delay delivery, including as a result of one or more supplier bankruptcies due to poor economic conditions, as a result
Also, Amazon sells many products from many different brands and companies. The customers are most important to Amazon and Amazon knows that the delivery service is one thing that customers want the most. The way that Amazon fulfills the customer’s satisfaction of its delivery service is by having 55 fulfillment centers located in North America. Because fulfillment centers are not retail stores, Amazon products aren’t required to charge sale taxes. Along with the 53 fulfillment centers that Amazon has in North America, Amazon also has 53 distribution centers in Europe, Japan, Asia and India. Since Amazon has a lot of warehouses in many different locations, it can reach to its customers more conveniently. Amazon has been growing throughout the years has allowed its company to be able to reduce its costs. Besides being one of the top online shopping sites, Amazon has also developed the Kindle, which is now one of the most popular e-reader tablets out
When Amazon.com first began in 1995, as strictly a book retailer, Bezos knew he had discovered an excellent company. After all, a physical bookstore cannot stock anywhere close to the number of books Amazon can offer online. Within a year, the company had a customer base of approximately 340,000 consumers and daily site visits were huge as well. But Bezos wanted to expand the company to offer music and DVDs, because he realized there was little or no barrier of entry. In the next years Amazon would emerge as a marketplace, expanding the company globally offering products from toys to kitchenware. Because of the relatively cheap prices Amazon was offering and also the growing number of online shoppers, the company was doing tremendous amounts of sales and creating profits.
Bargaining Power of Suppliers: The suppliers who provide the boxes and envelopes most likely sale the products in bulk, this is economies of scale and allows UPS to sale them at a cheaper price.
Amazon.com creates value for its customers by offering customers broad array of products to select from through their website and ensuring timely delivery of products to exhibit high level of commitment towards their business and customers
Amazon model initially offered customers access to massive selection without the needs to incur cost, time and stress of opening warehouses and stores and the needs for inventory handling. Amazon realized to ensure customers get a pleasant experience and Amazon acquire its inventory at reasonable prices, they need to be in control of the transaction process from beginning to the end through operating the business from their own warehouses.
PACE represented Amazon. For our business profile project, we focused on Amazon. Amazon.com Inc. was founded by Jeff Bezos in 1994. Amazon was first started in Bezos' garage and has turned into a billion dollar operation over the course of 22 years (Smith). Amazon is currently headquartered in Seattle, Washington and has branch locations all over the world.
Amazon.com, Inc Company started in 1994 and featured online in 1995. The company has done extremely well in the market achieving remarkable success. Initially, Amazon was known as Cadabra. Inc. however, the name of the company changes when the owners of the company knew that people confused the name for cadaver. Jeff Bezos is credited for founding the company. The company has its base in the United States of America as a multinational e-commerce company. Its headquarters are in Seattle, Washington. It has been rated as the largest online retailing company, in the entire world. It has close to three times the sales revenue that staples, Inc made as a runner up, in January 2010 (Shire, 2008).
Amazon is the world’s largest retailer online. Founded in 1994 it has started as an online bookstore but soon expends its catalog with software, video games, electronics, furniture, food, toys etc.
Jeffrey Bezos, the founder and current CEO of Amazon.com, initially started the company as an online bookstore in 1994. Within several months, Amazon spread its operation to all 50 states and abroad. Presently, customers from over 45 countries buy at Amazon. Over a short period of time, the company expanded sales to electronics, video games, software, CDs, DVDs, MP3 downloads, food, furniture, apparel, jewelry, and toys. Today, the company even produces its own products such as the Kindle series. Also, Amazon.com is one of the major providers of cloud computing services. Currently, the company is the largest global online retailer responsible for 20% of online retail market share.