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
7.
8.
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
