Amazon'coms European Distribution Strategy

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Amazon.coms European Distribution Strategy

• Team member M9801002 Zoey
• M9801207 Sharon
• M9801201 Haddy
• M9801104 Daniel

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Outline
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Evolution of Amazons supply chain and
distribution system in the US
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19951998Establishing Amazon.com

• Hold modest inventories and rely on wholesalers
  and publishers.
• Both wholesalers and publishers have their good
  points to Amazon.

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19951998Establishing Amazon.com
1998
1997
19961997
1995
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1999Building Addition Fulfillment Infrastructure

• Remain the e-tailing leader
• Get Big Fast strategy

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20002002Optimizing the Customer

• Focus on operational excellence
• Streamlining US Distribution Centers Processes
• Inventory Costs
• Delivery Processes
• Other Company Initiatives to Gain Profitability

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Amazon.com in Europe
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Challenge in Europe
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Challenge in Europe
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Challenge in Europe
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Challenge in Europe

Postal service
EDI (Electronic Data Interchange)
Hard to decrease the shipping costs 1.
Cost-cutting. 2. Restructuring effort to reach
profitability. 3. Unify the marketing and
branding functions.
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Did Amazon need three independent distribution
centers in UK , Germany ,and France or build a
European Distribution Network(EDN)?
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Assessing the EDN Opportunity

• EDN European Distribution Network
• Decentralized model
• Possible benefit of EDN
• Expand product selection through other DCs.
• Facilitate global sourcing at the global
  network.
• Reduce the risk of relying on a single DC.
• Improve customers experience.
• Expand into other countries from current DCs.

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Assessing the EDN Opportunity
Marsten Gate
Bad Hersfeld
Orleans
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Impact of the implementation of the EDN

• Internal impact
• redesign its transportation process
• stuff retraining
• infrastructure cost .and other
• Educate customer to associate a different
  shipping price to the delivery service level
  chosen.
• Implement postal injection, seek better terms
  from a pan-European carrier.

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Impact of the implementation of the EDN
If Amazon want expand to other European
country, should Amazon consider a new location
for a new DC?
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Hope under an EDN

• Procurement department would be able to
  centralized its purchase and extract higher
  volume discounts from suppliers.
• Required a better coordination among departments
  and a clear HR plan.

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Design the EDN

• Option1 link different sites to a single
  European distribution center.
• Option2 keep the three DCs to fulfill orders
  from other country side.
• Option3 keep two DCs, one serving north and
  other serving south.

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Design the EDN

• Three approaches
• Continue with its current strategy of holding
  inventory in all three DCs.
• Selectively share inventory among European sites.
• Three DCs inventories physically mixed based on
  demand patterns and inventory and transportation
  cost.

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Discuss Time
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Thanks for listening!!
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Focus on operational excellence

• Streamlining US Distribution Centers Processes
• Six Sigma DMAIC
• simulate holiday season conditions

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Focus on operational excellence

• Inventory Costs
• Improve inventory management to decrease carrying
  costs
• Refined the software used to forecast customer
  demand
• Established buying rules
• Integrated its suppliers management systems
• Implemented a set of cascading buying rules
• Avoid holding inventory
• wholesalers drop ship orders
• Partnering with other companies

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Focus on operational excellence

• Delivery Processes
• To reduce shipping costs, they developed a method
  called postal injection or zone-skipping
• postal injection eliminated processing steps and
  travel distances
• Other Company Initiatives to Gain Profitability
• 30 across-the-board discount
• Free shipping