1. Segmentation in Supply
Chain Management
Alicia Dereza
Ena Fejzagic

2. • What is the first thing that comes to your
mind when you see this logo?
• “Amazon is a black box.“ (Time Magazine,
2012)

3. • Amazon's warehouses have more square footage
than 700 Madison Square Gardens and could hold
more water than 10,000 Olympic Pools
• The first book Amazon.com ever sold was from
Bezos' garage in July 1995: "Fluid Concepts &
Creative Analogies: Computer Models of the
Fundamental Mechanisms of Thought "
• Amazon's current logo was designed to depict a
smile that goes from A to Z. "This signifies that the
company is willing to deliver everything to
everyone, anywhere in the world."

4. • Amazon.com, Inc. - an American international
multibillion dollar electronic commerce company
• Headquarters: in Seattle, Washington, US
• World's largest online retailer
• Originally an online bookstore, soon diversified,
selling DVDs, VHSs, CDs, video and MP3
downloads/streaming, software, video games,
electronics, apparel, furniture, food, toys, and
jewelry
• Producer of consumer electronics – Amazon
Kindle e-book reader and Kindle Fire tablet
computer

5. • Jeff Bezos’ critical insight when he founded
Amazon was that the Internet allowed a
retailer to have both (effectively) infinite
selection AND lower prices (because you
didn’t need to maintain a limited-in-size-yet-
expensive-due-to-location retail space)
• Amazon was founded on the premise of there
being a dominant strategy: better selection
AND better prices

6. • Amazon‘s story: systematically taking down
an entire existing industry, a story that called
for strategic depth, and not technical
wizardry, design brilliance or sheer energy
• Vision: to offer Earth’s biggest selection and
to be Earth’s most customer-centric company
• Customer-centric strategy and partnership
strategy
• Customer preference as the operational level
of business - basis for its service
differentiation advantage

9. • Supply Chain Management Strategy: the
Amazon Effect
• Amazon is almost everybody’s competitor
• Tipping points - intersection between
business strategy and supply chain
strategy

10. Development Of Warehouses
• Ingram etc.
• Space for the
storage of
goods did not
matter
External
suppliers
• For bestsellers
only
• Base for the
Amazon , but it
began to collapse
• 0,25 % profit
compared to 30%
possible
Few own
warehouses
• transportation costs
• inventory carrying
costs,
• the taxes and a
couple of
• other factors to
come up with a
network of DCs to
service customers
in a set of zip
codes
Reducing
costs
• 3 markets strategy:
• same day delivery
in major markets
• next day delivery in
secondary markets
• two day delivery in
tertiary markets
Warehousing
and service

11. Assessment of Amazon’s
Supply Chain
• Items displayed online are unique to each country
• Customer Service Representative localized to each country
• 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
- Higher prices
- Possible competitors on second and third markets
- Additional products which need different approach (electronic
devices etc.)

12. 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

13. 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

14. Recommendations
 Offline shops
 New products need totally different distribution
approach
 Diversification from their competitors
 New way of delivering orders (to the store)
 Saving money

15. Thank you for your
attention
Alicia Dereza
Ena Fejzagic