Case Analysis Of Amazon

Sarah Mallard Operation Management Spring 2014 Amazon.com’s European Distribution Strategy Analysis Executive Summary • Amazon was founded in 1995 by Jeff Bezos and became one of the first major companies to sell goods over the internet • Starting out as solely an online bookstore, Amazon has become the largest online retailer in the world. • It is divided into several independent organizations like Amazon Europe, Amazon US and Amazon Japan. • The major categories or modes of shipment for Amazon.com in the U.S. are drop-ship, split, partnered, and postal-injection. • The number of items in an individual order impacts Amazon.com’s order fulfillment. The number of items effects shipment because orders are sorted either single item orders or multi-item orders. • Also with U.S. operations, the type of product impact order fulfillment and shipment. Large and small item are never shipped together. • The primary factors Amazon Europe should use to direct the decision making about the EDN are network configuration, shipping processes, out of stock items, and customer satisfaction. • A new DC (hub, EDN) for Amazon Europe will impact on in-bound and out-bound shipments. An updated distribution configuration is needed to support its fast growth goal. • An implementation decision should be based on optimizing demand patterns, inventory and transportation costs, and Amazon Europe’s operations. • Using shipment attributes, identify the major categories, or modes, of shipment for Amazon.com in the U.S. Amazon.com’s US operation business model is based on “sell all, carry few”. Amazon offers consumers a wide selection of products while keeping inventories at low levels. A major interest for Amazon in the US is optimization of netwo... ... middle of paper ... ...pending on the country. Deciding on a 1 or 2 DC alternative may not be able to address the customization needed to serve different European areas. Amazon US has found success from optimizing their shipping process; due to the fact that there is only one postal service serving the entire nation. This is not the case in Europe. For two of the considered alternatives, increased delivery and lead time will occur due to distance between distribution center and customers. European postal carriers are fast but lack in cross border efficiency. Express delivery creates more uncertainty. Amazon Europe should consider making a partnership with international shipping companies, like UPS and FedEx, to receive a discount on high shipping fees while improve cross-border shipping difficulty. Delivery time and customer satisfaction are crucial for Amazon Europe’s success.