E-Business Logistics in India-

Amazon

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 Evaluation of Amazon’s Supply Chain

Laudon (2011) explains that the supply chain conception started in the 1980s and it has evolved into a very important business
concept. The supply chain is a network oforganizations and business processes to select raw materials to transform them into
intermediate and finished products and distribute the finished products to customers. Itconnects suppliers, industrial plants,
distribution centers, means of transportation, retail stores, and information by means of processes such as selection of raw
materials, inventory control, distribution and delivery, for the purpose of providing products and services from the source up to
the point of consumption.
In the past,the relationship between the customer and the supply chain ran through marketing. The customer talked to marketing
and if the information communicated from the customer involved changes to orders, these changes were communicated to supply
chain through the sales and operations planning system (S&OP) and the master production schedule (MPS).There was no need
for supply chain to talk to or even know anything about the customer. However, this system was not working because the supply
chain focused on cost and meeting the schedule but the customer often wanted responsiveness and flexibility. New radical
solution was developed where supply chain would get to know the customers up close and in person. Supply chain would focus
on those things that customers wanted also known as the customer-cientric supply chain. Like many things that have emerged in
supply chain management, the customer-centric supply chain is the result of the convergence of major forces, one of which is the
“amazon effect”.The Amazon effect is changing what customers expect from supply chain management. According to Aronow et
al (2015), Amazon is a modern retail juggernaut. Since its founding in 1994, it has grown from being simply an on-line bookstore
to a one-stop omni-channel retailer for everything from furniture to food to streaming entertainment service. More importantly, it
has changed how customers shop and what they expect, regardless of whether the customers are end users or a business. 24/7
customer service, easy to place orders, continuous flow of information about the order,reliable deliveries are some of its
features.Itcontinues to innovate in both products and services.Amazon manages its physical supply chain with precision and
efficiency, enabling broad adoption of its competitively priced hardware, which acts as a platform for softwareand media content
sold either discretely or through its Prime subscription service.In 2013, Amazon’s CEO Jeff Bezos announced that his company
is developing a drone-based delivery system called Amazon Prime Air which would be delivering products under five pounds in
locations within 10 miles of Amazon’s fulfillment centers within just 30 minutes or less.As per Amazon’s senior VP of
worldwide operations, Jeffrey Wilke, for company’s growth they focus primarily on price, selection and availabilityand all the
three depend critically on supply chain. Amazon has one of the most sophisticated supply chains-system in the world.Its
homemade applications handle nearly every aspect of its supply chain: warehouse management, transportation
management,inbound and outbound shipping, demand forecast, inventory planning and more. Amazon’s supply chain system is
so well integrated that when a customer places order for different items, the order management system communicates with
inventory and warehouse management systems to find the optimal distribution center or centers for fulfilling the order. The
customer knows within a minute how long it will take to ship the items and whether they will come in one package or separately
(Bacheldor, 2004).

Analysis of Supply Chain Management Amazon India

To start with, Amazon’s SCM has a strategic fit with its competitive strategy of being the retailer of choice for its customers. The
combination of multi-tier inventory management, superlative transportation, and highly efficient use of IT (Information
Technology), and its wide network of warehouses are all geared towards aligning its SCM with its competitive strategy.The next
aspect is related to its outsourcing of its inventory management. Amazon outsources the storage and distribution of products that
are not frequently purchased nor ordered for immediate delivery as well as products where the costs of storing them exceed the
marginal returns on their sales.On the other hand, Amazon stocks the frequently purchased and ordered items in its own
warehouses so that it can be responsive to the customer needs as well as not compromise on the delivery times and the lead times.
In other words, by segregating its inventory, Amazon is able to be responsive to the customers as well as cut costs or cut slack
where it is needed (Kotler, 2012, 65).Amazon divides its customer segments and follows a price differentiation strategy. The
various forms of delivery are one day delivery, free super saver delivery, first class delivery, and prime customers delivery.

For all these segments, Amazon offers the customers an option of paying more for faster delivery or retains the traditional lead-
time. Coupled with the inventory outsourcing, the customer segmentation into price-differentiated customers offers the companya
nimbleness and agility in the market that changes with dynamic fluctuations in demand.A key aspect of Amazon’s SCM is that it
has evolved over the years in response to its growth in the market. For instance, Amazon started off as a bookstore, which acts as
an intermediary between the buyers and the sellers and does not stock any product of its own.Gradually, this gave way to holding
some items in its own warehouses and at the present, Amazon follows a push-pull strategy wherein the inventory is held in a
push strategy and the shipment of the orders is done in a pull strategy. Of course, even now, Amazon follows pure pull
strategies for items that it does not stock.Any discussion on Amazon’s SCM is incomplete without an analysis of its multi-tier
inventory system. The first tier is the aggregation in the distribution centers, which ensures that Amazon holds fewer inventories
and responds to demand in a dynamic manner.The next tier is comprised of the partner distribution centers and the wholesalers
wherein whenever an ordered product is not available in its own distribution centers; Amazon can rely on its partners and
wholesalers to supply the customer with the required product. Further, through the use of sophisticated and real time IT, Amazon
is able to leverage efficiencies in its distribution.The third tier is comprised of the networks of third party sellers, publishers,
vendors, and manufacturers who ensure that Amazon acts as an intermediary that fulfills orders from customers by linking them
to this tier.

PROS AND CONS OF E-LOGISTICS-AMAZON

Pros
Amazon’s FBA program has lots of positive points, for sure. It’s not all roses; there are a few negative aspects, but let’s cover the
good stuff first.

1) No hassle for shipping and returns

When you get an order, packing it and sending it out is a lot of work. You have to print a packing slip, print a shipping label, fold up
a box, pack your item properly, tape up the box, stick on the shipping label, and leave it for the shipping guys to pick it up .Of course
it may be an employee doing this work for you – but it’s still quite a bit of work. Now if you got 10, 20, 30, or even more orders per
day, a good chunk of your time would just be lost in shipping !Enter Amazon FBA. You send your stuff to Amazon, they do
everything else for you. You literally just have to watch the sales come in and your numbers rise. That was just shipping. Now for
returns! You have to communicate with your buyer, send them an RMA, receive the item, inspect it for faults, send a replacement or
a refund, and resell your item .The logistics aren’t too difficult, but the communication can get quite tricky and tedious, especially if
you are dealing with a few returns per day .Amazon FBA puts your products into Amazon’s ridiculously simple returns process. You
don’t even have to deal with the customer – all of that is done through Amazon, and they handle all of the logistics, too.

2) Cheap shipping

The next big advantage of Amazon is really cheap shipping and packing costs.. If your product sells through Amazon itself,
you’re looking at $1.04 per unit in packing costs, and between $0.50 to $0.60 per pound of weight in handling costs – shipping
is free. So if you sell items that weigh 3 pounds on average, you’d pay about $2.50 per order for shipping .If your item sells
through any other channel and Amazon is fulfilling it for you, then your standard(media) sized parcel ships for $1.90 for standard
shipping, $0.60 for packing, and $0.45 per pound of weight in handling. So for the same 3 pound product, you’re looking at
$3.80 per order for shipping, which is still very cheap compared to what you’d have to pay if you are doing this in house.

3) Automatic Prime

When you fulfil with Amazon FBA, your items automatically qualify for Amazon Prime shipping, so all Prime members can get free
two-day shipping for your products .Amazon Prime is a huge sales motivator – the prospect of getting your products delivered in just
two days, and for FREE, is awesome. Most of the time, if an item is available from two sellers, one via Prime and the other via
regular shipping, the Prime seller will get the sale. What’s more, you don’t have to pay anything more as a Prime seller – you’ll be
charged the same rate, regardless of whether or not your customer ordered via Prime or regular shipping .Just the benefit of Prime
makes FBA one of the most lucrative online business opportunities around right now.

4) Buy box priority

Along with Prime, you may have noticed two things: sellers using FBA are higher up in the buy box, and they also have a little
emblem saying “Fulfilled By Amazon.” In listings where 20 or more people are selling the same product, every inch you can move
yourself higher in the buy box could mean hundreds of orders.

5) Multi-channel fulfilment
Finally, when you use FBA, you’re not limited to just selling on Amazon’s marketplace. You can sell your products through any
channel you wish to sell on, and fulfil your multi-channel orders with FBA. There are even solutions that will 

Amazon sees FBA as a win-win situation. Not only are they getting paid to store your stuff, they also grow the selection of items in
their catalogue every single day – when sold through the Amazon marketplaces, these are all more things for Amazon to make their
15% cut on.

Cons
Despite all of these overwhelming pros, there are a few cons to the FBA program that you need to consider.

1) Stale inventory/losing track

Like any other warehouse operation, if you have hundreds, if not thousands of products in Amazon FBA, it’s highly likely that not all
of them will sell. You’ll probably end up with quite a bit of stale inventory that you are paying rent for and not selling. The other
issue is that it’s difficult to keep track of FBA inventory once it becomes too much. A hundred to a couple of hundred products are
easy to keep track of, and they’ll fit on one page of your Seller Central dashboard .Once those products reach the thousands, though,
it will be hard to really be abreast of what inventory you have, what you need, and what you should cut back on. Sure, you’ll be able
to track your best sellers, but aside from that, it’ll be difficult – especially since the whole process is so automated.

2 )Pooled inventory

Due to the sheer quantity of products, and sellers, in Amazon’s warehouses, not every merchant gets their own bin location for every
product. Quite often your inventory will be pooled with the same products, from other sellers .This is generally not that big of a deal,
but what it means is that the physical product your customer actually receives may not be the exact one you sent to Amazon. It may
be one from another seller. There is a chance another seller will be selling the “same item” but of lesser quality, or potentially even
counterfeit. There are stories out there of sellers having their account suspended due to defective , or counterfeit merchandise that
was actually supplied by another seller. It’s not common, but it can happen.

3) Difficulty in shipping product to Amazon

The final con factor of Amazon FBA is the difficulty of getting things over to Amazon’s warehouses. Amazon has a very strict
ASIN/UPC system, and you have to label each and every one of your products individually, pack them up into multiple shipments
(that go to Amazon’s multiple warehouses), and send them off. So one shipment to FBA will actually be 3 or 4 shipments, which will
also add to your bottom line costs .Amazon does offer a service where they will label the products for you at $0.20 per product, so
that may be worth considering as you are starting out.

Conclusion

At the end of the day, Amazon FBAs pros clearly outweigh the cons, and it is definitely a solid business model that people are doing
very, very well with.
 SWOT ANALYSIS OF AMAZON

Introduction

Amazon is the world’s leading online retailer and its success has spurred other physical, brick, and mortar retailers to have an
online presence. It is often referred to as the online equivalent of Wal-Mart because of its reach and global footprint as well as its
aggressive pricing strategies. Amazon can leverage on several opportunities in the emerging markets and can ensure that its
global supply chain of networked warehouses deliver substantial value for itself and its stakeholders. Further, Amazon has to
rethink its business model of operating at close to zero margins and the fact that the company has not returned a decent profit in
the last five years gives it much room for improvement.

Strengths

 Being the world’s leading online retailer, Amazon derives its strengths primarily from a three-pronged strategic thrust
on cost leadership, differentiation, and focus. This strategy has resulted in the company reaping the gains from this
course of action and has helped its shareholders derive value from the company.
 Amazon primarily derives its competitive advantage from leveraging IT (Information Technology) and its use of e-
Commerce as a scalable and an easy to ramp up platform that ensures that the company is well ahead of its competitors.
 One of the key strengths of Amazon is that it enjoys top of the mind recall from consumers globally and this
recognition has helped it enter new markets, which were hitherto out of bounds for many e-Commerce companies.
 Using superior logistics and distribution systems, the company has been able to actualize better customer fulfillment
and this has resulted in Amazon deriving competitive advantage over its rivals.

Weaknesses

 In recent years, Amazon as part of its diversification strategy has been “spreading itself too thin” meaning that it has
allowed its focus to waver from its core competence of retailing books online and allowed itself to venture into newer
focus areas. While this might be a good strategy from the risk diversification perspective, Amazon has to be cognizant
of losing its strategic advantage as it moves away from its core competence.
 As Amazon offers free shipping to its customers, it is in the danger of losing its margins and hence, might not be able
to optimize on costs because of this strategy.
 Considering the fact that Amazon is an online only retailer, the single-minded focus on online retailing might “come in
the way” of its expansion plans particularly in emerging markets.
 One of the biggest weaknesses and something that has been oft commented upon by analysts and industry experts is
that Amazon operates in near zero margin business models that have severely dented its profitability and even though
the company has high volumes and huge revenues, this has not translated into meaningful profits for the company.

Opportunities

 By rolling out its online payment system, Amazon has the opportunity to scale up considerably considering the fact that
concerns over online shopping as far as security and privacy are concerned are among the topmost issues on the minds
of consumers. Further, this would improve the company’s margins as it lets it reap the advantages of using its own
payment gateway.
 Another opportunity, which Amazon can capitalize on, relates to it rolling out more products under its own brand
instead of being a forwarding site for third party products. In other words, it can increase the number of products under
its own brand instead of merely selling and stocking products made by its partners.
 Amazon can increase the portfolio of its offerings wherein it stocks more products than the norm currently which
places it in a position of strength and comfort as this can translate into higher revenues.
 The fourth opportunity, which Amazon has, is in terms of expanding its global footprint and open more sites in the
emerging markets, which would certainly give it an edge in the uber-competitive online retailing market.
 Threats

 One of the biggest threats to Amazon’s success is the increasing concern over online shopping because of identity theft
and hacking which leaves its consumer data exposed. Therefore, Amazon has to move quickly to allay consumer
concerns over its site and ensure that online privacy and security are guaranteed.
 Because of its aggressive pricing strategies, the company has had to face lawsuits from publishers and rivals in the
retailing industry. The obsessive focus on cost leadership that Amazon follows has become a source of trouble for the
company because of the competitors being upset with Amazon taking away the business from them.
 Finally, Amazon faces significant competition from local online retailers who are more agile and nimble when
compared to its behemoth type of strategy. This means that the company cannot lose sight of its local market conditions
in the

Conclusion

Amazon has its task cut out as far as its future strategies are concerned and this SWOT Analysis can provide a
guide and a roadmap that the company can implement going forward. The key take away from this SWOT Analysis is
that Amazon has to focus on profitability and not volumes alone if it has to be competitive in the future where volumes
and market leadership are not alone to add value to its stock.
 STRATEGIC PARTNERS OF AMAZON
Jeff Bezos' first letter to Amazon shareholders after the company went public in 1997 included a list of "important
strategic partners" for the nascent online bookseller.
The list included some of the biggest names in the 1990s internet boom like Yahoo, AOL, and Netscape.

None of the companies on the list exist as independent entities today, while Amazon is one of the largest corporations in the
world.
On Thursday, Markets Insider reported that Wall Streeters predict Amazon is poised to hit a $1 trillion valuation.
The internet has dramatically changed in the few decades of its existence, and a remark from an early Amazon shareholder letter
provides an interesting view of just how many winners and losers the early tech boom created.

In Amazon's first letter to shareholders after going public in 1997, among the many accomplishments CEO Jeff Bezos touted that
the company “established long-term relationships with many important strategic partners, including America Online, Yahoo!,
Excite, Netscape, GeoCities, AltaVista, @Home, and Prodigy.

Twenty-one years later, Amazon stands tall as one of the largest companies in the world, with a market capitalization of around
$900 billion dollars as of Wednesday evening. Meanwhile, the eight strategic partners on Bezos' list - all major players in the late
90s tech boom - no longer exist as independent entities, either going defunct in the years after the bubble burst or being acquired
by other tech and telecommunications companies.

Here's what happened to each of those companies:

 America Online, the king of the dial-up internet era, famously bought Time Warner at the height of the tech bubble in
2000, then the largest merger in history, according to a retrospective from The New York Times. Nine years later, the
struggling company spun off AOL. In 2015, Verizon bought AOL and now operates AOL under its Oath subsidiary.

 Yahoo was one of the biggest web portals in the 90s. In 2017, Yahoo joined AOL when Verizon acquired the
company's internet business for $4.5 billion and placed it under the Oath subsidiary.

 Excite was another popular web portal in the mid-90s. In 1999, Excite merged with another member of Bezos' list, the
high-speed internet provider @home. Unfortunately, the combined company was a casualty of the dot-com bubble's
popping, and the company filed for bankruptcy in 2001.

 Netscape published one of the most popular web browsers of the 1990s, and the predecessor to the Mozilla Firefox
browser. In 2002, the company was purchased by America Online, and subsequently became a part of Verizon’s Oath
Subsidiary where it remains today.  

 GeoCities was a popular early web-hosting service. GeoCities was purchased by Yahoo in 1999, and then shut down a
decade later.

 AltaVista was an early search engine. After a series of deals during and after the dot-com bubble, AltaVista ended up
being purchased by Yahoo in 2003. Yahoo shut the service down in 2013.

 @Home was a high-speed internet service provider in the 1990s. As mentioned above, the company merged with
Excite, but then went bankrupt amid the dot-com bubble popping in 2001.

 Prodigy was an early internet service provider and competitor with America Online. In 2001, Prodigy was acquired by
SBC Communications (now AT&T). 
 FINDINGS AND SUGGESTIONS

Amazon.com has changed the face of retail through its use of bold supply chain strategies and its deployment of
innovative technologies. It is constantly trying to minimize human intervention in its supply chain process. Adapting to changes
like new business models, changes in the customer base, new technologies and changes in the supply chain requires the company
to implement strategic moves, customer-centric supply chains, new technologies and changes in the supply chain. Also to enable
this transformation, Amazon must first identify their key customers, and then structure their organization so that the there is no
conflict between the supply chain team and other departments like sales and marketing. Pure internet retailers’ supply chains
could arguably be considered more flexible than their clicks-and- mortars counterparts. Amazon is efficient and effective for
consumers because they have the ability to maximize options for customers and the capacity to accommodate customer segments
differently based on advances in technology: Amazon’s own logistics network is one of its greatest achievements of which is it
aiming at the reduction of dependence on third parties. As Amazon is known for large investments into Research &
Development, the company has numerous possibilities to expand and to serve a larger number of markets and thereby become
more unique and relevant. As currently Amazon's supply chain is not especially sustainable nor environmental‐friendly so it may
focus on Green Retailing in the future. This may be achieved by implementing recyclable packaging as well as energy saving
standards in company owned facilities.

CONCLUSION

Supply chains can and should evolve over time in response to product life cycles or experience with a new market.
Amazon follows a customer-centric flywheel-business model which is especially characterized by putting special emphasis on
choice, convenience and price. Developing the drone-based delivery system is a major indicator that Amazon is well ahead of
other players in the retail industry and it is doing everything possible to leverage all of the latest supply chain technologies to
maintain their supply chain the clear market leader. In order to make good on increasingly fast delivery promises, the company
has positioned many new warehouses in proximity to local urban markets. Amazon's supply chain may be described by an
efficient and flexible inventory management, fast delivery fulfillment, effective collaborations with partners, and strategic
acquisitions of supporting systems and companies and a high level of customer service. The new world of the customer-centric
supply chain will require supply chain managers to embrace the change, drive it in their organizations and learn to manage with
their customers in mind rather than focusing strictly on costs.