Amazon case study

SARIN RAJU

CET,TRIVANDRUM

AMAZON CASE

LEVEL ANALYSIS

1. PRE-STRUCTURAL LEVEL

WORLD’S LARGEST ONLINE STORE

2. UNISTRUCTURAL LEVEL

WIDE GEOGRAPHICAL EXPERIENCE-5

INTERNATIONAL STORES-’WHOLE WORLD

IS MARKET PLACE’

3. MULTISTRUCTURAL LEVEL

BUYER SALE APPROACH,MULTI-LEVEL E-

COMMERCE,MULTIPLE PRODUCTS AND

CUSTOMER TRAFFICKING

4. RELATIONAL LEVEL

MULTI-TIER INVENTORY MODEL-VERY LOW

FIXED COSTS

5. OUT OF BOX

LEVERAGED ON THE STRENGTHS OF BRAND

VALUE AND BUSINESS MODEL

QUESTIONS

AND

ANSWERS

1. Why is Amazon building more warehouses as it grows? How many

warehouses should it have and where should they be located?

Answer: As it grew, the company added warehouses, allowing it to react

more quickly to consumer orders,

It is clear that when the no of warehouses increase the response time

decrease, and when the no of warehouses decrease the response time

increase. So by increasing the no of warehouses and locate them near the

customer will improve response time .

Amazon has about 50 warehouses, 20 in U.S and rest 30 in Canada,

France ,Germany , Italy , United Kingdom , China , and Japan.

2. What advantages does selling books via the internet provide over atraditional bookstore? Are there any disadvantages to selling viainternet?

Answer:

Now a days world has become global village that’s why there is a need tostart business via e-commerce as we know e- business affects customerservice elements such as product variety, availability, customer experience,time to market, visibility, and return- ability.

Amazon offers a much larger selection of books than a typical bookstore.Offering the same selection at a retail store would require a huge locationwith correspondingly large amount of inventory.

Disadvantages:

Response time

Transportation cost

3. Should Amazon stock every product it sells?

Answer: No …. It should stock those products which are in higher demand.

4. What advantages can bricks-and-mortar players derive from setting

up an online channel? How should they use the two channels to gain

maximum advantage?

Answer: The performance of traditional bookstore supply chain can be

improved significantly by combining the strength of the retail and online

channels. It is important to realize that the benefits of aggregation are most

significant for low- demand books whose demand is hard to forecast.

The book supply chains should be structured so that retail outlets carry

many copies of best sellers for customer purchase and one copy of low

demand books to encourage customers to browse and make impulse

purchase. Terminals or internet kiosks should be provided so that

customers wanting to order low demand books that the bookstore can

offer.

This approach allows the supply chain to reduce inventories by

aggregating low demand books sold online while keeping transportation

costs low for best sellers sold at retail store.

5. What advantages/ disadvantages does the online channel enjoy in sale

of shoes/ diapers relative to a retail store?

Answer:

Advantages:

1. Time to market

2. Flexible pricing, portfolio, promotions

3. low facility cost

Disadvantages:

1. Transportation cost

2. Response time

3. IT cost

6. For what products does the online channel offer the greater advantage

relative to retail stores? What characterizes these products?

Answer:

Online channel offer the greater advantage for those products having large

product varieties.

For example; Netflix offers a much large selection of movies than any video

rental store, offering the same selection at a store would require a huge

location with correspondingly large amount of inventory.

AMAZON BASIC SUPPLY

CHAIN

Supply chain drivers

Facilities:

warehousing and order-fulfillment for third-party

sellers

49 fulfillment centers across globe

United States – 14 spread across 14 states

Canada – 2

France – 3

Germany – 7

Italy – 1

United Kingdom – 8

China – 8

Japan – 6

TRANSPORTATION

Transportation

rely primarily on national parcel couriers

UPS, FedX

Own logistics network

INVENTORY

BOOK SHELF OF AMAZON

Inventory

SOURCING

PRICING

Pricing

Amazon does make millions of price changes

daily

HIGH- LOW PRICING

HIGH PRICE FLUCTUATIONS

InformationAmazon web service: allow partner retailers, the individual sellers and developers to advertise their products through Amazon.com by building their web based applications in a reliable, scalable, and low cost way.

Simple storage service: designed to make web-scale computing easier for the business partners and developers by web service interface to keep and receive any data, any time, from anywhere.

Smart analytic search: allow detecting and decreasing the examples of fraud in Amazon web site by analyzing the behavioral patterns of fraudsters and designing the predictive scores.

INFORMATION:AMAZON

SERVERS

INFORMATION :AMAZON CLOUD

STORAGE

STRATEGIC FIT

AMAZON STRTEGY ANALYSIS

Strategic fit

Competitive strategy

Respond to wide range of demand

Fulfill orders in short lead time

Meet high service level

Supply chain strategy

Both cost effective and responsive

Facility: more towards centralization

Inventory: high

Transportation: Faster

Information: high investment

Cyclic view

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