md253/mk252 electronic commerce march 29, 2005 amazon
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MD253/MK252 Electronic Commerce March 29, 2005 Amazon.com. Issues Covered. Amazon’s strategy competitive advantage Inventory efficiencies turns & float Excellence in customer service Personalization & switching costs Partnerships & ‘service’ businesses - PowerPoint PPT PresentationTRANSCRIPT
MD253/MK252 Electronic Commerce
March 29, 2005 Amazon.com
Issues Covered• Amazon’s strategy
– competitive advantage
• Inventory efficiencies– turns & float
• Excellence in customer service– Personalization & switching costs
• Partnerships & ‘service’ businesses– Syndication model, merchants.com, web services
• Challenges
Amazon’s Strategy
Offline vs. Online Retail Efficiencies
• Turnover– 3 times / year– avg. book in store 121
days– Book on shelf 68+ days
after paying suppliers
• Inventory– shelf & warehouse stock– 30% returns
• Turnover– 16 times / year– avg. book in house
22 days– avg. 28 days of
float / title
• Inventory– all warehouse stock– few returns
Capital Efficiency – Negative Operating Cycle (Float)
Day 0
ProductReceived
ProductShipped
CustomerPayment
SupplierPaid
22 25 53
28 Days
Inventory Turns for Full Product Line, 2004Amazon = 16
B&N = 3, Home Depot = 5, Best Buy = 5, Wal-Mart = 7
Amazon’s Warehouse Network
• 5 facilities, > 4 million sq. feet• Extremely diverse product mix• Mixed Automation & Manual
Sorting and Conveyance• Direct to consumer fulfillment
Photos: blog link provided by the San Jose Merc News
captures early demand & improves inventory forecasting
Leveraging the Amazon Platform
• Amazon.com as seller– AMZN inventory & product detail pages
• Syndicated stores / Merchants@– AMZN tech & inventory, co-branded website – Ex: Borders, HMV, Waterstones, Waldenbooks,
VirginMegastore
• Marketplace– 3rd party inventory, AMZN product detail pages
• Merchant.com (Amazon Enterprise Solutions)– AMZN technology powers partner websites– Ex: Target, NBA.com, Bombay Company, DVF Shops