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Why Amazon? Company Overview Business model in Amazon Web based Business Model Products and Services Value Proposition Inventory Management Outsourcing Drop-shipment Model Supply Chain Management Push/Pull Process of SCM Amazons SCM
Company Overview
Amazon.com, Inc. (NASDAQ: AMZN) is an American-based multinational electronic commerce company. Headquartered ---Seattle, Washington. America's largest online retailer. Jeff Bezos founded Amazon.com, Inc. in 1994 and launched it online In 1995. It started as an online bookstore. With 2.5 million titles, it became the Earths Biggest Bookstore.
Value Proposition
Minimum download time Selection from wide product range Had inventory of millions of items Book lovers can post/read reviews on the site Book search option- by author, subject, title or publication 40% discount on selected feature books, 30% on hard covers and 20% on paperbacks Shipment within one week Notification to customers via emails Secured online payment gateway
CUSTOMER SERVICE
PRICE
SELECTION
CONVENIENCE
Carrying costs- basically opportunity costs E.g - rent, lighting, staffing etc Ordering costs basically acquisition costs E.g purchase order, recording , accounting etc Shortage costs E.g urgent purchases, loss of reputation etc
Inventory Management
Initially Bezos aimed at hassle-free operations Time and money not to be spent in dealing with the inventory.
In 1999
Added 6 new warehouses to total to 10 Computerized warehouses Increased warehousing capacity from 300,000 sq. feet to over 5 million sq. feet Automation of events after placement of order to make inventory management easier
Drop-Shipment Model
Till 2001 Amazon was in deficit of US$2.86 billion. Earned its first ever profit of $5 million in the 4th quarter of 2001. Year 2002 recorded sales of $3.93 billion which was 26% higher than sales of 2001. Cost of operating warehouses reduced from 20% to 10% where as the capacity increased 3 times. Inventory turnover was 20 times as compared to other retailers having 15 times.
Partner Selection
The Contractual Relationship
PUSH PROCESSES
PULL PROCESSES
Customer
Customer
Pull
Amazon Retail Store
Pull
Distributor
Warehouse
Publisher Publisher
AMAZONS SCM
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