Issues Covered:
Issues Covered Amazon’s strategy
competitive advantage
Inventory efficiencies
turns & float
Excellence in customer service
Personalization & switching costs
Partnerships & ‘service’ businesses
Syndication model, merchants.com, web services
Challenges
Amazon’s Strategy:
Amazon’s Strategy
Offline vs. Online Retail Efficiencies:
Offline vs. Online Retail Efficiencies Turnover
3 times / year
avg. book in store 121 days
Book on shelf 68+ days after paying suppliers
Inventory
shelf & warehouse stock
30% returns Turnover
16 times / year
avg. book in house 22 days
avg. 28 days of float / title
Inventory
all warehouse stock
few returns
Capital Efficiency – Negative Operating Cycle (Float):
Capital Efficiency – Negative Operating Cycle (Float) Day 0 Product
Received Product
Shipped Customer
Payment Supplier
Paid 22 25 53 28 Days Inventory Turns for Full Product Line, 2004 Amazon = 16 B&N = 3, Home Depot = 5, Best Buy = 5, Wal-Mart = 7
Amazon’s Warehouse Network:
Amazon’s Warehouse Network 5 facilities, > 4 million sq. feet
Extremely diverse product mix
Mixed Automation & Manual Sorting and Conveyance
Direct to consumer fulfillment
Photos: blog link provided by the San Jose Merc News
Slide8:
captures early demand & improves inventory forecasting
Leveraging the Amazon Platform:
Leveraging the Amazon Platform Amazon.com as seller
AMZN inventory & product detail pages
Syndicated stores / Merchants@
AMZN tech & inventory, co-branded website
Ex: Borders, HMV, Waterstones, Waldenbooks, VirginMegastore
Marketplace
3rd party inventory, AMZN product detail pages
Merchant.com (Amazon Enterprise Solutions)
AMZN technology powers partner websites
Ex: Target, NBA.com, Bombay Company, DVF Shops