• Amazon is one of the pioneers of online consumer sales, it based in Seattle,
• Amazon sells books, music, and many other items over the internet.
• Amazon started by filling all orders using books purchased from a
distributor in response to customer orders.
• It uses the U.S. postal service and other package carriers such as UPS and
FedEx to send products to customers.
• Almost $2 billion outbound shipping- related cost in 2009
• In 2009 Amazon offered more than 460,000 books in digital form, and also
added a significant amount of audio and video content for sale in digital
• Besides books and music, Amazon has added many product categories such
as toys, apparel, electronics, jewelry, and shoes.
• In 2009, one of its largest acquisitions was Zappos, a leader in online shoe
sales, added a lot of product variety.
• In 2010 acquisition by Amazon was diapers.com
Question#01. why is Amazon building more warehouses as it grows?
How many warehouses should it have and where should they be
Answer: As it grew, the company added warehouses, allowing it to react
more quickly to consumer orders,
• It is clear that when the no of warehouses increase the response time
decrease, and when the no of warehouses decrease the response time
increase. So by increasing the no of warehouses and locate them near the
customer will improve response time .
• Amazon has about 50 warehouses, 20 in U.S and rest 30 in Canada,
France ,Germany , Italy , United Kingdom , China , and Japan.
Question# 02. what advantages does selling books via the internet provide
over a traditional bookstore? Are there any disadvantages to selling via
• Now a days world has become global village that’s why there is a need to
start business via e-commerce as we know e- business affects customer
service elements such as product variety, availability, customer experience,
time to market, visibility, and return- ability.
• Amazon offers a much larger selection of books than a typical bookstore.
Offering the same selection at a retail store would require a huge location
with correspondingly large amount of inventory.
• Response time
• Transportation cost
Question#03. should Amazon stock every product it sells?
Answer: No …. It should stock those products which are in higher demand.
Question#04. what advantages can bricks-and-mortar players derive from
setting up an online channel? How should they use the two channels to
gain maximum advantage?
Answer: The performance of traditional bookstore supply chain can be
improved significantly by combining the strength of the retail and online
channels. It is important to realize that the benefits of aggregation are most
significant for low- demand books whose demand is hard to forecast.
• The book supply chains should be structured so that retail outlets carry
many copies of best sellers for customer purchase and one copy of low
demand books to encourage customers to browse and make impulse
purchase. Terminals or internet kiosks should be provided so that customers
wanting to order low demand books that the bookstore can offer.
• This approach allows the supply chain to reduce inventories by aggregating
low demand books sold online while keeping transportation costs low for
best sellers sold at retail store.
Question#05. what advantages/ disadvantages does the online channel
enjoy in sale of shoes/ diapers relative to a retail store?
1. Time to market
2. Flexible pricing, portfolio, promotions
3. low facility cost
1. Transportation cost
2. Response time
3. IT cost
Question#06. For what products does the online channel offer the
greater advantage relative to retail stores? What characterizes these
• Online channel offer the greater advantage for those products having large
• For example; Netflix offers a much large selection of movies than any
video rental store, offering the same selection at a store would require a
huge location with correspondingly large amount of inventory.