MD253/MK252 Electronic Commerce March 29, 2005 Amazon.com

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MD253/MK252 Electronic CommerceMarch 29, 2005
Amazon.com
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Issues Covered

• Amazons strategy
• competitive advantage
• Inventory efficiencies
• turns float
• Excellence in customer service
• Personalization switching costs
• Partnerships service businesses
• Syndication model, merchants.com, web services
• Challenges

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Amazons Strategy
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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

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Capital Efficiency Negative Operating Cycle
(Float)
28 Days
Day 0
22
25
53
Product Received
Supplier Paid
Product Shipped
Customer Payment
Inventory Turns for Full Product Line,
2004Amazon 16BN 3, Home Depot 5, Best
Buy 5, Wal-Mart 7
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Amazons Warehouse Network

• 5 facilities, gt 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
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captures early demand improves inventory
forecasting
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Leveraging the Amazon Platform

• Amazon.com as seller
• AMZN inventory product detail pages
• Syndicated stores / Merchants_at_
• 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

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