Business Strategy:
At its core, the company has maintained its customer-centric ethos, where its customers
comprise three sets: retail customers, seller customers, and developer customers.
The company proudly proclaims that it aims to be the “Earth’s most customer-centric
company.” Since its inception, Amazon has won over the trust and loyalty of its customers by
perfecting its marketing mix by offering “a comprehensive selection of products, low prices, fast
and free delivery, easy-to-use functionality, and timely customer service.”
“Customer obsession rather than competitor focus, passion for invention, commitment to
operational excellence, and long-term thinking.”
the business strategy involved providing a wide global product selection, competitive pricing, and
exceptional customer service, while the operational strategy involved leveraging advanced
technology, data analysis, and logistics to optimize their supply chain and enhance customer
experience.
what is stockless fulfillment model
The stockless fulfillment model is a strategy used by companies, such as
Amazon.com, where they do not keep a large inventory of products in their own
warehouses. Instead, they rely on suppliers and wholesalers to fulfill orders
directly to customers. This model allows for high inventory turnover, low holding
costs, and immediate availability of products to customers.
what kind of technology they have invested in?
Amazon.com heavily invested in technology to improve customer experience and
support back-office logistics. This included innovations like One-ClickSM
shopping, Gift Click, store-wide sales ranking of different products, instant
recommendations, and Amazon auctions. The company also created in-house
applications to accept and validate customer orders, place and track orders with
suppliers, manage and assign inventory to customer orders, and ensure proper
shipment of products to customers using various ordering criteria. Additionally,
a significant portion of the investment went into information technology to
support back-office logistics.
with which retailers the company has made partnership?
Amazon.com made partnerships with other retailers, such as Toys R Us, Target,
and Borders, among others. These retailers used Amazon's Web pages through
the Amazon Marketplace and Merchants @ programs, and Amazon Enterprise
Solutions provided them with backend e-commerce and fulfillment solutions.
How did the company avoided paying sales tax
Barnes & Noble avoided paying sales tax by keeping their online and physical
store entities separate to avoid taxation. The backend fulfillment systems of the
online entity were closely tied with those of the bricks-and-mortar operation.
This allowed them to use the parent company’s expertise on the back end to run
Internet fulfillment, thus avoiding the obligation to pay sales tax due to the
physical presence of the parent company in every state in the U.S.
what is backend fulfillment system and bricks and mortar operation
The backend fulfillment system refers to the processes and technology used to
manage and fulfill customer orders, including inventory management, order
processing, and shipping. In the context of the case, it specifically relates to the
systems used by Barnes & Noble to handle online orders and tie them closely
with their physical store operations.
The term "bricks and mortar operation" refers to traditional physical retail
stores, as opposed to online or e-commerce operations. In this case, it refers to
the physical stores of Barnes & Noble, which were kept entirely separate from
their online entity to avoid taxation.
how did Amazon.com focused on data analysis and operations research to create
an advanced supply chain, leading to significant achievements in the area.
Amazon.com focused on data analysis and operations research to create an
advanced supply chain by rigorously analyzing data using operations research
techniques. This effort was directed by Gang Yu, Amazon.com’s vice president of
Worldwide Supply Chain Operations, who received his Ph.D. from the OPIM
department at the Wharton School at the University of Pennsylvania. They used
historical data from their existing fulfillment network to estimate seasonal peaks,
model alternatives for new capacity, and anticipate product mix. Additionally,
they implemented sophisticated algorithms to compare book availability and
prices across multiple vendors, selecting the best possible fulfillment option
given current and future demand. This data-driven approach allowed them to
make informed decisions and optimize their supply chain for efficiency and
customer satisfaction.
did business strategy aligned with operational strategy?
Yes, in the case of Amazon.com, the business strategy aligned closely with the
operational strategy. The business strategy focused on providing a wide global
product selection, competitive pricing, and exceptional customer service, while
the operational strategy involved leveraging advanced technology, data analysis,
and logistics to optimize their supply chain and enhance customer experience.
By aligning the business strategy with the operational strategy, Amazon.com was
able to effectively execute its business goals through its operational activities.
This alignment allowed the company to efficiently deliver on its value
proposition to customers, maintain a competitive edge in the market, and
achieve its long-term objectives.
the operational strategy supported the business strategy by:
1. Optimizing Supply Chain: Amazon.com's operational strategy involved investments
in fulfillment centers, sophisticated algorithms for comparing book availability and
prices, and the use of historical data to estimate seasonal peaks and anticipate
product mix. This optimization of the supply chain directly supported the business
strategy of providing a wide global product selection and exceptional customer
service.
2. Enhancing Efficiency: The operational strategy focused on operational efficiency,
which aligned with the business strategy's goal of competitive pricing and seamless
customer experience. By leveraging technology and data, Amazon.com was able to
streamline its operations and deliver products to customers in a timely and costeffective manner.
3. Expanding Product Offerings: Through partnerships with independent sellers and
other retailers, Amazon.com's operational strategy expanded its product offerings,
aligning with the business strategy of providing a wide global product selection.
Crowdshipping Platforms: Harnessing crowdshipping platforms that connect individuals or
independent couriers with delivery needs, enabling peer-to-peer delivery services and
leveraging existing transportation networks.
Product Assortment: Tailoring the product assortment to align with local preferences,
tastes, and cultural norms. This may involve offering region-specific products or variations
of existing products to cater to local preferences.
Compliance and Legal Requirements: Ensuring compliance with local laws, regulations, and
standards related to product safety, labeling, packaging, and import/export restrictions.
Supplier Network Expansion: Identify and engage with suppliers in different geographic
regions to reduce reliance on a single sourcing location. This can involve establishing
relationships with suppliers in different countries or regions to mitigate the impact of
geopolitical, economic, or natural risks.
Multi-Sourcing Strategy: Implement a multi-sourcing approach for critical components or
materials, spreading procurement across multiple suppliers to minimize the risk of supply
chain disruptions due to supplier-specific issues.
1. Omnichannel Integration:
Integrate online and offline channels to create a seamless omnichannel experience,
allowing customers to browse, purchase, and return books across multiple touchpoints,
including physical stores and digital platforms.