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Amazon: online sale (supply chain management)

Amazon: online sale case solution book Sunil chopra

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Amazon: online sale (supply chain management)

  1. 1. Presented by: Muhammad Hanif
  2. 2. SUMMARY • Amazon is one of the pioneers of online consumer sales, it based in Seattle, Washington. • 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 form • 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
  3. 3. Question#01. why is Amazon building more warehouses as it grows? How many warehouses should it have and where should they be located? 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.
  4. 4. Question# 02. what advantages does selling books via the internet provide over a traditional bookstore? Are there any disadvantages to selling via internet? Answer: • 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. Disadvantages: • Response time • Transportation cost
  5. 5. 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.
  6. 6. Question#05. what advantages/ disadvantages does the online channel enjoy in sale of shoes/ diapers relative to a retail store? Answer: Advantages: 1. Time to market 2. Flexible pricing, portfolio, promotions 3. low facility cost Disadvantages: 1. Transportation cost 2. Response time 3. IT cost
  7. 7. Question#06. For what products does the online channel offer the greater advantage relative to retail stores? What characterizes these products? Answer: • Online channel offer the greater advantage for those products having large product varieties. • 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.