Amazon Case study Essay

As seen from 2014, virago.com is a no brainer of a line of work proposition. To solar day you can get close things from Amazon.com books, movies, health and beauty products, appliances, sporting goods..online and the social club will ship these purchases to your home the same day and often at little or no cost to you. The typical 2014 university student has gr have up with the World Wide Web and eCommerce and takes these services for granted. For its part Amazon recorded revenues of $17.09 billion dollars in 2013 plainly for all that activity, the company did not yield a profit. According to its founder and CEO Jeffrey P. Bezos, Amazon strives to be the retailer of choice for all things and for all people globally. To this end, Amazons profit margins on most products are razor thin and its task practices regarding free shipping and generous return policies erode earnings. so far there is no question that Amazon.com is one of the darlings of the new millenniums Internet econom y and a trend-setting retailer in the era of online retailing. In contrast, Amazons early history was marked by startling losses and lots of red ink. Why was this so?To understand Amazons origins, we must go back to 1994 when Bezos worked for the Shaw grocery store chain and read a study that predicted the Internet would flip ones wig in popularity. He figured that before long people would be making money exchange over the Web. After considering any number of products to sell online, he settled on books, a standardised product already electronically cataloged, that could be easily managed through an automated supply chain system. approximately notably, the typical book store typically managed an bloodline of two to three thousand books whereas his imagined online service that would broaden them all. In Bezos business model, he would disintermediate the retail process, eliminating stores and wareho aims. Instead his clients would purchase their books from catalogs on his comp anys Web site. Orders would be filled from a new kind of facility, a fulfillment center. In implementing this business model, Bezos quickly discovered that the only way to ensure a positive customer experience was for Amazon to ope calculate their own fulfillment centers, controlling the transaction from start to finish.All of this may sound sort of straightforward today but Bezo and his backers were treading in totally unchartered waters in 1995. To compete in this space, Amazon.com required a huge infusion of capital. Those fulfillment centers cost intimately $50 million apiece. The front of these in Fernley Nevada housed threemillion books, CDs, toys, and housewares in a building a quarter-mile long by two hundred yards wide. What distinguished this facility from the typical retail warehouse was that it was completely computerized. The associated business processes were largely automated and info intensive. Once customer orders were placed via Amazon.coms Web site, the co mpanys information systems would send these orders to fulfillment center pickers who would in turn roam the shelves in a systematic manner assembling customer orders. Along the way, these information systems would capture detailed information on the time and steps involved in filling individual orders, worker flaw rates, the flow and turnover of inventory and of course associated cost of operations data. Amazon managers employ this information to squeeze every last drop of productivity out of their processes.For example, as reported by Fred Vogelstein . by redesigning a bottleneck where workers transfer orders arriving in green plastic bins to a conveyor belt that automatically drops them into the appropriate chutes, Amazon has been able to increase the capacity of the Fernley warehouse by 40%. In 2003, Amazons warehouses handle three times the volume they could in 1999, and in the knightly three years the cost of operating them has fallen from nearly 20% of Amazons revenues to s light than 10% percent. The company doesnt believe it will even have to think about building a new warehouse for an early(a) year. The warehouses are so efficient that Amazon turns over its inventory 20 times a year. Virtually every other retailers turnover rate is under 15. Indeed, one of the fastest-growing and most profitable parts of Amazons business today is its use of its supply chain management processes to service the eCommerce business needs of other retailers, such as Toys R Us and Target. All of this helps explain Bezoss larger point, one hes been making since he started Amazon but that people are only now starting to believe In the animal(prenominal) world its the old saw location, location, location, .. The three most important things for us are applied science, technology, technology. But technology is actually the means by which Amazon manages its most valuable asset, its data. Data about products, data about customers, data about supply chain management, data about suppliers.There just arent other companies that let a consumer order two out of what are millions of products in a warehouse and and so quickly and efficiently, at low cost, get those two things into a single box.. But success was not aforgone conclusion. Amazon faced a lot of red ink in its first quintet years. Ultimately its devotion to data paid off. As its competitors disappeared from the scene, Amazon leveraged its data management capabilities to drive error out of operations, personalize the Web experience for its customers, and add value to its relations with suppliers by providing them with deep business intelligence concerning the publics interest in their various products. To achieve these results, Amazon developed its own methods and built its own Web-enabled information systems from scratch. Fortunately, the company could take advantage of established supply-chain management (SCM) systems for the backend of the business. In the concluding analysis, it was Amazons ded ication to collecting and using information to run its business, an effort spearheaded by the companys Chief Technology Officer Werner Vogels and his MIS team that turned the enterprise profitable. Now that Amazon has master both the fulfillment side of eCommerce and the data and information management side of global business management, two major profit centers at Amazon that help feed its bottom line include back-end fulfillment services for other global retailers and cloud computing services for the likes of iTunes and Netflix.