ROLE OF LOGISTICS IN SUCCESS OF AMAZON.COM

AMAZON.COM

Amazon.com : a Fortune 500 company based in Seattle, opened on the World Wide Web in July 1995 and today offers Earth's Biggest Selection.

Largest online e-tailer of books, music, videos, toys, and gifts. Aspires to become a one-stop shop for merchandise on the Web.

B-web type:

Aggregation (e-tail)

Agora (auctions/Zshops) hybrid model

Highly automated and centralized operations

COMPETITORS

WHAT MAKES AMAZON STAND OUT?

DRIVERS OF SUCCESS

Only Online retailing: Cost efficient and one click ordering

Selling an expanded selection of products online

Lean Manufacturing and TQM methodologies for services

Continually adding new product lines or capabilities

Integrating technologies like CRM, SCP, WMS, OMS

Launching Innovative products like Kindle

AMAZON’S STRATEGY

AMAZON.COM STRATEGY

CON

VENIEN

CE

SELECTION

PRICE

SERVICESCOPE

SCALE

CUSTOMER

EXPERIENC

E PILLARS

SUPPLY

CHAIN

LEVERS

DIFFERENCE BETWEEN BRICK-AND-MORTAR &

CLICK-AND-MORTAR

SUPPLY CHAIN CHALLENGES

Supply Chain Design

Number and location of distribution centers (DCs)

Ever expanding product line

Order Cost Minimization

Internal facility or external partner used to fulfill order

Finding the lowest cost solution

Inventory Segmentation and Policy

Inventory stored in its facilities Vs. Inventory stored in upstream tiers

Products supplied only by third-party affiliates

SUPPLY CHAIN DRIVERS

Facilities: Low expenditure on real estate, employees, inventory and utilities

Inventory: Low inventory costs due to direct shipment from to customers from Fulfillment centre.

Transportation: Transports orders for delivery, via US Postal Service (60% of orders) or UPS (40% of orders)

Information: IT systems in place for faster information flow.

Sourcing: Sourcing directly from publishers reduces intermediary costs and ensures faster delivery.

Pricing: Low prices due to less overheads. 8-10% cheaper than a physical retailer.

INVENTORY ANALYSIS

E-TAILERS MODEL

IT SYSTEMS

AMAZON’S SUPPLY CHAIN STRUCTURE

AMAZON.COM WEBSITE AND IT

SYSTEMS

CUSTOMERS

VENDOR / SUPPLIER

PARTNER DC

WHOLESALER DCAMAZON.COM

DCsPUBLISHER /

MANUFACTURER

INDEPENDENT SUPPLIER- THIRD

PARTY

TIER I

TIER II

TIER III

INFORMATION FLOW

PHYSICAL FLOW

DC INBOUND PROCESS

RESERVE STORAGE

RANDOM STORAGE

LIBRARY PRIME STORAGE

PALLET PRIMESTORAGE

CASE FLOW PRIME STORAGE

STORAGE DECISION

PRODUCT RECEIVED

PUT AWAY PROCESS

STORAGE DETERMINATION

DC OUTBOUND PROCESS

PALLET PRIME PACKING

PACKINGPACKING

ITEM SORTATIONFULL-CASE

NON-CONVEYABLESINGLE UNIT

ACCUMULATION

SHIPPING

LIBRARY PRIME PICKING

CASE FLOW PRIME PICKING

TRANSPORTATION

LOGISTICS DIFFERENTIATORS

Core competence in one-to-one inventory management and distribution

Electronic Data Interchange (EDI): For order management, sales reports by vendor

Free shipping offers over a certain amount.

Six Sigma approach to its distribution services

Effective b-web relationships with distributors and suppliers like Ingram

Customer Fulfilment Networking (CFN):

Direct sourcing from publishers,

Efficient delivery system, WMS, OMS, SCP, CRM, VMI

LATEST DEVELOPMENTS

Launch of Kindle 2 - a digital-reading device

Increased global reach: 6 countries

Introduced AmazonBasics, AmazonWireless, AmazonMP3, Amazon Outdoor recreation stores

Frustration free packaging initiative

Acquired Zappos.com - leading online apparel and footwear retailer

Amazon Web services: (AWS) and Elastic Compute Cloud (computing capacity- EC2) – Databases & Data Storage

Fulfilment services to other customers

INSIDE THE AMAZON WAREHOUSE

REFERENCES

1. http://www.davechaffey.com/E-commerce-Internet-marketing-case-studies/Amazon-case-study

2. http://logisticstoday.com/global_markets/outlog_story_6813/

3. https://vendorcentral.amazon.com/gp/vendor/sign-in/183-5122358-0917959

4. www.amazon.com5. www.andyde.com/amazon.pdf

THANK YOU