2. Amazon International
What should be consolidated to
the Europe level? What should remain
localized by country?
How should the distribution
network be configured to support
growth?
Should a European Distribution
Network (EDN) be created? How will
inventory placement, the customer
experience, staffing, etc. be affected by
these changes?
3. Europe: An Aggregate Of Regional Markets
Items displayed online are unique to each country
Country laws
Customer Service Representative localized to each country
Fixed and control Pricing
Payment options
4. Options Considered by Amazon
1. Keep three locations using them as backup alternatives when
the primary country location cannot fulfill an order.
2. Selectively group inventory by categories at certain locations,
reducing inventory costs.
3. Fully integrate all locations with a centrally managed European
Distribution Network.
5. Wholesalers
Amazon.com (US Division) has choices for suppliers and only uses
wholesalers as a backup
In Europe: Lack of wholesalers demands relationships with
hundreds of publishers and distributors Expensive direct
contracts
Difficult and limited EDI penetration
Difficult to maintain low costs for customers
6. Three Independent Distribution Centers
They have unified many of the operations of the subsidiaries,
including marketing, and customer service, and yet still keep three
independent operations
Each country has access to different kinds of products
Repetitive Inventory at different locations.
Excellent postal services for local shipping but unreliable cross-
border logistics
Future expansion will amplify these problems
7. Recommendations
Adopt Centralized Operations Management
Implement European Distribution Network (EDN)
Centralize management office in the United Kingdom where
most operations take place.
Use strategic order fulfillment to minimize lead time
Use strategic inventory distribution to reduce cost
8. Recommendations
Create Cross-Docking enabled warehouses
Preferably in Southern Europe where Amazon faces higher
demand
Amazon’s Infrastructure is already established for
communication between the DCs
Using the existing DC would be more cost efficient
9. Recommendations
Leverage some Amazon.com techniques
Drop shipping: May increase price but customer service level
will remain high
Pick profiles: Multi item orders may need to be fulfilled by
more than one location
Technology investments: “virtually” centralized inventory in a
single system, EDI internally and externally
10. Recommendations
Manage Shipping Costs
Continue free shipping for local products, extending the use of
Postal Injection for some high demand products
Full truck loads from DCs to major cities
Reduce postal service charges, maintain low shipping cost and
offer free shipping in some new places
