“ROLE OF E-COMMERCE IN REDUCTION

OPERATIONAL COST”

Project reported submitted to

JNAN VIKAS MANDAL’S MOHANLAL RAICHAND MEHTA

COLLAGE OF COMMERCE AIROLI NAVI MUMBAI

In partial fulfillment of the requirements for the award of the degree of

Master of Commerce

Submitted by

RUTUJA S. PATIL

Under the guidance of

Mrs. UJWALA MADAM

POST GRADUATE DEPARTMENT OF COMMERCE

JVM MEHTA DEGREE COLLAGE AIROLI
UNIVERSITY OF MUMBAI
SEPTEMBER 2022

pg. 1
 “ROLE OF E-COMMERCE IN REDUCTION
OPERATIONAL COST”

Project reported submitted to

JNAN VIKAS MANDAL’S MOHANLAL RAICHAND MEHTA

COLLAGE OF COMMERCE AIROLI NAVI MUMBAI

In partial fulfillment of the requirements for the award of the degree of

Master of Commerce

Submitted by

RUTUJA S. PATIL

Under the guidance of

Mrs. UJWALA PAWAR

POST GRADUATE DEPARTMENT OF COMMERCE

JVM MEHTA DEGREE COLLAGE AIROLI
UNIVERSITY OF MUMBAI
SEPTEMBER 2022

pg. 2
 CERTIFICATE

This is to certify that the project entitled “ROLE OF E-COMMERCE IN

REDUCING OPERATIONAL COST” by MRS. UJWALA PAWAR is a
bona-fide record of work done under my guidance and supervision in partial
fulfillment of the requirement for the award of the degree in master of commerce.

Place : Navi Mumbai

Date : 21-09-2022
RUTUJA S PATIL

pg. 3
pg. 4
 DECLARATION
I, RUTUJA S PATIL, here declare that the bona-fide record of “ROLE
OF E-COMMERCE IN REDUCTION OPERATIONAL COST” done in
partial fulfillment of the M.Com degree program of Calicut University under the
guidance of Mrs. UJWALA PAWAR Post Graduate Department of Commerce,
Jvm Mehta Degree Collage Navi Mumbai.
I also declare that the project has not formed the basic of reward of any
degree or any other similar title to any other University.

Place : Navi Mumbai

Date : 21-09-2022
RUTUJA S PATIL

pg. 5
 INDEX
SR.NO TITLE PG.NO
1. INTRODUCED

2. REVIEW OF LITERATURE

3. RESEARCH METHOODLOGY

4. DATA ANALYSIS INTERPRETATION &

PRESENTATION

5. CONCLUSION & SUGGESTION

6. BIBLIOGRAPHY

pg. 6
 1. INTRODUCTION
Internet-based E-Commerce has been embraced as a means of reducing operational cost
and as a high potential means of generating revenue (Levi’s 1996). The ubiquity of the web
and the availability of browsers across different platforms provide a common base upon which
E-Commerce applications can be built, especially in the enterprise.

In economy and management field the internet is broadly used in the global
smooth lots of things, and it seems the arena has come to be very small. now not restricted to
conversation and statistics trade, but past that in which it appeared the so known as digital
trade, that is the system of buying and selling over the internet and that is the mild. sense of the
term, and has supplied plenty of things, collectively with the fees which have been plaguing a
number of groups and became their biggest subject. in which it was feasible for the owners of
capital too small to enter the sector of commerce comfortably and make investments their
money, where furnished in charges depleting and non-depleting. in which she turned into the
maximum famous programs in that time is the software of electronic transfers of price range,
but the volume of this utility is confined to establishments and company giants. After that, he
seemed in another sort of applications, namely, electronic data interchange, which contributed
to the growth of the utility of E-commerce than just financial transactions to other transactions
and contributed to the growth in the contribution slides this technique from monetary
institutions, factories, and retailers.
These technological advances in communications media have the latest
(statistics revolution), some have referred to as the0.33 business revolution in which it became
a quantum leap in communications media and the velocity of statistics has contributed to
expand the circle of the volume of alternate between the nations of the world.The advertising
and buy of labor and items thru the net, which is likewise called digital swapping, is a vital
factor of the E-trade enterprise. Many articles have been written on blossom of E-commerce.
The digital medium known as the net has the ability to noticeably reduce actual-time change
time, processing time, and running charges, at the same time as on the identical time making
records handy to humans everywhere in the international. E-commerce superior by way of
menacing commercial enterprise expenses. It has turn out to be less critical to do not forget
issues together with software program distribution and software program setup at this level,
which has endorsed the spread of E-trade thru using Intranets, Extranets, and the net due to this
standard degree.
E-commerce opens up new avenues for the global advertising and marketing
of physical items, as well as capacity for the improvement of new companies that supply facts
and different understanding-based intangible items to clients across the globe. E-commerce
refers to any and all kinds of interactive industrial transactions which are made feasible through
the usage of laptop networks. those tendencies are important to the worldwide economy as well
as the economies of man or woman nations on account that E-commerce improves the
performance of the worldwide economy as a whole. In 5 root reasons green device may be
evolved. They include shortening contractual distances and timeframes, lowering distribution
and operating costs, expediting object introduction, offering extra information to customers
and sellers, and expanding patron preference and supplier attain, to name some examples.

pg. 7
 Although this research is worried with the impact of E-Commerce in
decreasing running expenses in an association, it isn't always restricted to that topic. Moreover,
when offline outlets investigate their working expenses, they ought to recollect a plethora of
business fees similarly to the actual quantity of exchanges that occur. it is extra costly to
behavior an unmarried change whilst there are fewer transactions. Alternatively, a huge range
of transactions arriving on the equal time would possibly overload the personnel and
merchants. In an Ecommerce firm, the working expenses are the identical irrespective of what
numbers of orders are available in or how many orders are cancelled. Deal Dey is striving to
offer an easy and exciting manner of obtaining top notch prices on wonderful stories thru the
usage of social media. DealDey.com supports small groups in the network, and in exchange,
they provide clients with awesome investment funds. they're striving to establish a "Shared
advantage" scenario on a daily basis for neighboring stores that need to draw new clients, in
addition to for purchasers who want to store cash while taking use of extraordinary services
and activities to be had in their personal metropolis, on a day-by-day basis.

Definition of E-commerce
With the growing wide variety of distributors in recent years, there has been
a boom within the range of definitions of E-trade. For the most part, the definitions were
straightforward: E-trade has been defined because the procedure of replacing goods and
services thru the internet. when the word turned into coined later, it was extended to encompass
the "trade of knowledge" in addition to the "trade of goods." E-trade, in step with Rainer and
Ciesielski, is described as the "technique of obtaining, selling, moving, or replacing of
commodities, services, or perhaps records through the use of pc networks, along with the
internet." furthermore; this presupposes a non-stop waft of information, both before and after
the sales technique. the truth that the process of change is mediated by using technology and
that it is dependent on inter- and intra-hierarchical moves for the reason of coping with such
exchange E-commerce is defined by using Chaffey (2007, p.8) as "any electronically mediated
trades between an affiliation and any outsider" on this context. To summaries, E-commerce is
now not limited to change and has developed into a greater inclusive word than it changed into
before. As an end result, the following description of E-trade can be utilized, which is primarily
based on posted literature: inside the context of enterprise, E-trade refers to the procedure of
integrating all of an employer's methods, sports, and offerings as a way to facilitate the trading
of products and the trade of records and belongings with its partners thru the usage of laptop
networks and electronic technology.
The phrases E-trade and e-commercial enterprise are synonymous within the
context of the net. Many people use the phrases e-business or even e-advertising and marketing
to refer to E-trade in a greater preferred sense (Schneider 2011, pp. Four). The IBM definition
of e-enterprise, which states that it's miles "the transformation of essential commercial
enterprise tactics thru using internet era," gives a clear indication of the sturdy relationship
between the two ideas. Pointers for essential your E-trade running charges in simple steps. If
you may keep your online employer nicely, self-regulating, and developing, you'll be much
less probable to lose your customers to the opposition or be forced to shut your doorways.
Indexed under are a few hints for retaining walking expenses below control as decrease
products return, style, footwear, jewelry, necklaces, and bangles are only a few of the things
available on Amazon which might be primarily based on a length chart: every other approach
of lowering object returns is to make longer the time period for returning items.

pg. 8
 You could also lessen object returns by looking at your income facts and
identifying the customer demographics with the greatest go back charges, after which
disengaging them from your advertising and marketing efforts and accomplishing them
immediately. You can use a tool which include Zapier to collect data on every item return made
through PayPal and Stripe, amongst different services. customers with the best charges of go
back may be identified by means of spooling the records via a spreadsheet or other utility of
your preference. for instance, you may have a look at that a disproportionately huge variety of
returns are for things that had been sold via Instagram or Facebook referrals. As an alternative,
you could use the go back shape to accumulate records at the purpose for returning an object.
These techniques will offer you with a higher expertise of which patron categories to avoid and
which styles of things now not to sell to particular customers if you want to reduce return quotes
in your enterprise.

Lower Inventory Costs

Ordinary stock inspections have to be conducted with a purpose to lower your

E-commerce operational charges. with the aid of the use of this manner, you can confirm that
you aren't obtaining an excessive amount of products in inventory, which might boost your
garage costs needlessly and reduce your profit margins. you may additionally combine slow
things with more relevant, high-quality-selling items with a purpose to get faster sales
outcomes. you could additionally entice clients to shop for your ugly matters with the aid of
along with them as a loose present with the acquisition of more desired items. no longer best

pg. 9
can technological improvements assist you in disposing of outdated stock, however they may
also entice buyers to newer, more enticing items, ensuing in progressed income.

The advancement of E-commerce

E-trade called "network commerce," or buying and selling over a community,
digital commerce has been around for greater than decades. advertising and marketing,
perusing/selection, buying, promoting, charging/invoicing, and fee are a number of the most
essential elements of internet trade to apprehend. private fee-introduced networks are used to
carry out traditional digital trade consisting of digital facts Interchange (EDI), report transfers,
and standardized identity systems, amongst other things (vans). enterprise-to-business digital
facts interchange (EDI) structures are the forerunners of present-day net-primarily based E-
commerce. they are not just like the net in that they may be private and proprietary, and they
do not permit for browsing or marketing. The digital statistics interchange (EDI) device is a
type of inter organizational device. Business-to business networked EDI structures, inclusive
of those evolved via GE statistics offerings and debuted in 1995, are a really perfect instance.
The electronic records interchange (EDI) software automates the practice and transmission of
inter organizational purchase orders, invoices, cargo popularity documents, and bills." GE
information offerings manages the world's biggest digital records interchange local area, which
includes extra than forty, thousands alternate partners.
As E-commerce develops, EDI systems have developed to provide higher-
stage offerings which include exchanges and work processes across organizations, further to
records trade, because of the excessive price of those structures and the excessive stage of
coordination required between executing companions, they may be now not perfect for
enterprise to business communications or client interactions. The engage is an exceptional
device for promoting labor and gadgets directly to the general public over the internet. internet
trade grows at an exponential charge as the wide variety of people who utilize the net grows.
despite the exposure garnered by corporations consisting of E-trade and Arnazon.com, online
commercial enterprise-to-business ecommerce keeps dominating the ecommerce market.
consistent with Forrester research, annual enterprise-to-commercial enterprise E-trade is
expected to grow from $forty-three billion in 1998 to $1 trillion via 2003, whilst commercial
enterprise-to-client E-trade is expected to grow from $43 billion in 1998 to $1 trillion by way
of 2003.
E-commerce would develop from $7. eight billion in 1998 to $a hundred
billion with the aid of 2003, in step with forecasts. net-based totally commerce is extra
convenient and less high priced than digital records interchange (EDI). furthermore, customers
will have got right of entry to the ordering gadget and on-line inventory in any respect hours
of the day, each day. Clients might also confirm the inventory reputation on dynamic web sites,
simply as they can test the popularity of their purchases positioned on line.
The lack of interplay is one type of evaluation. The Lands' end live provider,
then again, now hyperlinks shoppers who click for assistance with a private online consumer
who synchronizes his or her browser with the customer's browser so that both customers are
seeing identical goods on their displays. The growth of E-trade and the reputation of recent
technologies before stepping into the thesis's valuable subject matter (the impact, the hurdles,

pg. 10
and the benefits of E-commerce), I trust it is crucial to outline how ecommerce has grown over
the years and what quick the managers were given to comprise greater generation into their
establishments. Schneider (2011) distinguishes between stages within the increase of E-
commerce: the first wave and the second one wave.
The "first wave" of E-commerce becomes broadly speaking pushed by means
of large organizations within the economically fields, so easy get entry to finance, often from
overseas sources. It is suitable to refer to E-trade at this early level as a "landgrab." without
delay, a whole new marketplace changed into fashioned, and establishments with good enough
approach and preference to "seize from the land" had been able to do so. those big businesses
had been the primary to see the possibilities that E-trade may provide and were the primary to
start investigating and exploiting those opportunities, because of the reality that most people
of agencies were reliant on external traders, getting the benefit turned into as a substitute
uncommon.
The pressure on smaller groups become without a doubt extra intense, and a
massive quantity of them skilled economic losses as a result. For a long term, the technology
became smooth to apply, low-priced, and the internet connection become poor. Websites were
mostly in English; e-mails have been dispatched in an unstructured manner, and the integration
of ecommerce with different approaches turned into inefficient. The "Second wave" is defined
through the technical explosion that befell after 2001, the advent of cell broadband, and the
improved speed of the net at a low fee. The land had already been seized, and the principal
actors' concentration had now modified from taking pictures to defensive the territory they had
taken. Whilst enterprises started to consciousness greater on competitive advantage and
formulating methods to accomplish it, it set the degree for the introduction and reception of
ecommerce from smaller agencies that could use their very own internal assets to compete with
larger companies. it's also essential to cope with some of the issues that have arisen as a result
of the use of recent generation. the usage of the instance of Stockdale and status (2004), they
argued that the blessings of adopting E-commerce ought to be obvious and enormous in order
that companies are advocated to development up the ladder from a fundamental to a more
advanced degree of ecommerce.

pg. 11
 E-trade may additionally theoretically enhance overall performance in two
approaches: first, by growing the purchaser base and quantity of purchases; 2nd, by decreasing
expenses related to the implementation of E-commerce. There are a few assets for consumer
networks such as get entry to, collaborate, engage, connect and customize. E-commerce
businesses should maintain a competitive part, failing which they'll be forced to shut their
doorways. it is critical to keep your running prices as low as feasible on the way to compete
with online retailers along with Amazon and to preserve a healthful, self-regulating, and
expanding company. there are various tactics for lowering your E-commerce operational
charges when all elements are taken into consideration. other strategies to recollect encompass
hold in mind to concentrate on imparting top-notch services with the intention to increase client
retention and decrease consumer procurement prices.

Operational Cost
Operating costs are associated with the maintenance and administration of a business
on a day-to-day basis. Operating costs include direct costs of goods sold (COGS) and other
operating expenses—often called selling, general, and administrative (SG&A)—which
include rent, payroll, and other overhead costs, as well as raw materials and maintenance
expenses. Operating costs exclude non-operating expenses related to financing, such as
interest, investments, or foreign currency translation.

The operating cost is deducted from revenue to arrive at operating income and is
reflected on a company’s income statement.

o Operating costs are the ongoing expenses incurred from the normal day-to-day of
running a business.
o Operating costs include both costs of goods sold (COGS) and other operating
expenses—often called selling, general, and administrative (SG&A) expenses.
o Common operating costs in addition to COGS may include rent, equipment, inventory
costs, marketing, payroll, insurance, and funds allocated for research and development.
o Operating costs can be found and analysed by looking at a company's income
statement.

Businesses have to keep track of operating costs as well as the costs associated with non-
operating activities, such as interest expenses on a loan. Both costs are accounted for
differently in a company's books, allowing analysts to determine how costs are associated with
revenue-generating activities and whether the business can be run more efficiently.
Generally speaking, a company’s management will seek to maximize profits for the company.
Because profits are determined both by the revenue that the company earns and the amount
the company spends in order to operate, profit can be increased both by increasing revenue
and by decreasing operating costs. Because cutting costs generally seems like an easier and
more accessible way of increasing profits, managers will often be quick to choose this method.

Trimming operating costs too much can reduce a company’s productivity and, as a
result, its profit as well. While reducing any particular operating cost will usually increase
short-term profits, it can also hurt the company’s earnings in the long term.

Types of Operating Cost

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 While operating costs generally do not include capital outlays, they can include many
components of operating expenses, such as:

 Accounting and legal fees

 Bank charges
 Sales and marketing costs
 Travel expenses
 Entertainment costs
 Non-capitalized research and development expenses
 Office supply costs
 Rent
 Repair and maintenance costs
 Utility expenses
 Salary and wage expenses

Operating costs will also include the cost of goods sold, which are the expenses directly
tied to the production of goods and services. Some of the costs include:

 Direct material costs

 Direct labour
 Rent of the plant or production facility
 Benefits and wages for the production workers
 Repair costs of equipment
 Utility costs and taxes of the production facilities

A business’s operating costs are comprised of two components, fixed costs and variable costs,
which differ in important ways.

1. Fixed Cost
A fixed cost is one that does not change with an increase or decrease in sales or
productivity and must be paid regardless of the company’s activity or performance. For
example, a manufacturing company must pay rent for factory space, regardless of how much
it is producing or earning. While it can downsize and reduce the cost of its rent payments, it
cannot eliminate these costs, and so they are considered to be fixed. Fixed costs generally
include overhead costs, insurance, security, and equipment.

Fixed costs can help in achieving economies of scale, as when many of a company’s
costs are fixed, the company can make more profit per unit as it produces more units. In this
system, fixed costs are spread out over the number of units produced, making production more
efficient as production increases by reducing the average per-unit cost of production.
Economies of scale can allow large companies to sell the same goods as smaller companies
for lower prices.

The economies of scale principle can be limited in that fixed costs generally need to
increase with certain benchmarks in production growth. For example, a manufacturing
company that increases its rate of production over a specified period will eventually reach a
point where it needs to increase the size of its factory space in order to accommodate the
increased production of its products.

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 2. Variable Cost

Variable costs, like the name implies, are comprised of costs that vary with production.
Unlike fixed costs, variable costs increase as production increases and decrease as production
decreases. Examples of variable costs include raw material costs and the cost of electricity. In
order for a fast-food restaurant chain that sells French fries to increase its fry sales, for
instance, it will need to increase its purchase orders of potatoes from its supplier.

It's sometimes possible for a company to achieve a volume discount or "price break"
when purchasing supplies in bulk, wherein the seller agrees to slightly reduce the per-unit cost
in exchange for the buyer’s agreement to regularly buy the supplies in large amounts. As a
result, the agreement might diminish the correlation somewhat between an increase or
decrease in production and an increase or decrease in the company’s operating costs.

For example, the fast-food company may buy its potatoes at $0.50 per pound when it
buys potatoes in amounts of less than 200 pounds. However, the potato supplier may offer the
restaurant chain a price of $0.45 per pound when it buys potatoes in bulk amounts of 200 to
500 pounds. Volume discounts generally have a small impact on the correlation between
production and variable costs, and the trend otherwise remains the same.

3. Semi Variable Cost

In addition to fixed and variable costs, it is also possible for a company’s operating
costs to be considered semi-variable (or “semi-fixed"). These costs represent a mixture of
fixed and variable components and can be thought of as existing between fixed costs and
variable costs. Semi-variable costs vary in part with increases or decreases in production, like
variable costs, but still exist when production is zero, like fixed costs. This is what primarily
differentiates semi-variable costs from fixed costs and variable costs.

An example of semi-variable costs is overtime labour. Regular wages for workers are
generally considered to be fixed costs, as while a company’s management can reduce the
number of workers and paid work hours, it will always need a workforce of some size to
function. Overtime payments are often considered to be variable costs, as the number of
overtime hours that a company pays its workers will generally rise with increased production
and drop with reduced production. When wages are paid based on conditions of productivity
allowing for overtime, the cost has both fixed and variable components and is considered to
be a semi-variable cost.

Introduction of Company
Amazon.com, Inc. is an American multinational technology company focusing
on e-commerce, cloud computing, online advertising, digital streaming, and artificial
intelligence. It has been referred to as "one of the most influential economic and cultural
forces in the world", and is one of the world's most valuable brands. It is one of the Big
Five American information technology companies, alongside Alphabet, Apple, Meta,
and Microsoft.
Amazon was founded by Jeff Bezos from his garage in Bellevue, Washington, on July
5, 1994. Initially an online marketplace for books, it has expanded into a multitude of product
categories, a strategy that has earned it the moniker The Everything Store. It has

pg. 14
multiple subsidiaries including Amazon Web Services (cloud computing), Zoox (autonomous
vehicles), Kuiper Systems (satellite Internet), and Amazon Lab126 (computer
hardware R&D). Its other subsidiaries include Ring, Twitch, IMDb, and Whole Foods Market.
Its acquisition of Whole Foods in August 2017 for US$13.4 billion substantially increased its
footprint as a physical retailer.
Amazon has earned a reputation as a disruptor of well-established industries through
technological innovation and "aggressive" reinvestment of profits into capital expenditures. As
of 2021, it is the world's largest online retailer and marketplace, smart speaker provider, cloud
computing service through AWS, live-streaming service through Twitch, and Internet
company as measured by revenue and market share. In 2021, it surpassed Walmart as the
world's largest retailer outside of China, driven in large part by its paid subscription
plan, Amazon Prime, which has over 200 million subscribers worldwide. It is the second-
largest private employer in the United States.
Amazon also distributes a variety of downloadable and streaming content through
its Amazon Prime Video, Amazon Music, Twitch, and Audible units. It publishes books
through its publishing arm, Amazon Publishing, film and television content through Amazon
Studios, and has been the owner of film and television studio Metro-Goldwyn-Mayer since
March 2022. It also produces consumer electronics-most notably, Kindle e-
readers, Echo devices, Fire tablets, and Fire TVs.
Amazon has been criticized for customer data collection practices,[19] a toxic work
culture, tax avoidance, and anti-competitive behaviour.
199-2006: Early Years
Amazon was founded on July 5 1994 by Jeff Bezos, who chose the Seattle area for its
abundance of technical talent, as Microsoft was in the area.
Amazon went public in May 1997. It began selling music and videos in 1998, and began
international operations by acquiring online sellers of books in the United Kingdom and
Germany. The following year, it began selling music, video games, consumer electronics, home
improvement items, software, games, and toys.
In 2002, it launched Amazon Web Services (AWS), which initially focused on
providing APIs for web developers to build web applications on top of Amazon's ecommerce
platform. In 2004, AWS was expanded to provide website popularity statistics and web crawler
data from the Alexa Web Information Service. AWS later shifted toward providing enterprise
services with Simple Storage Service (S3) in 2006, and Elastic Compute Cloud (EC2) in
2008, allowing companies to rent data storage and computing power from Amazon. In 2006,
Amazon also launched the Fulfilment by Amazon program, which allowed individuals and
small companies (called "third-party sellers") to sell products through Amazon's warehouses
and fulfilment infrastructure.
2007-Present :Growth
Amazon purchased the Whole Foods Market supermarket chain in 2017.
During the COVID-19 pandemic, Amazon introduced a hazard pay of $2-per-hour,
changes to overtime pay, and a policy of unlimited, unpaid time off until April 30, 2020. The
hazard pay increase expired in June 2020, and the paid time-off policy in May 2022. Amazon
also introduced temporary restrictions on the sale of non-essential goods, and hired 100,000
more staff in the US and Canada.[37] Some Amazon workers in the US, France, and Italy
protested the company's decision to "run normal shifts" despite many positive COVID-19
cases. In Spain, the company has faced legal complaints over its policies. A group of US

pg. 15
Senators wrote an open letter to Bezos in March 2020, expressing concerns about worker
safety.
On February 2, 2021, Amazon announced that Jeff Bezos would step down as CEO to
become executive chair of Amazon's board in Q3 of 2021. Andy Jassy, previously CEO of
AWS, became Amazon's CEO.
Board of Director of Company
As of June 2022, Amazon's board of directors were:

 Jeff Bezos, executive chairman, Amazon.com, Inc.

 Andy Jassy, president and CEO, Amazon.com, Inc.
 Keith B. Alexander, CEO of IronNet Cybersecurity, former NSA director
 Edith W. Cooper, co-founder of Medley and former EVP of Goldman Sachs
 Jamie Gorelick, partner, Wilmer Cutler Pickering Hale and Dorr
 Daniel P. Huttenlocher, dean of the Schwarzman College of Computing, Massachusetts
Institute of Technology
 Judy McGrath, former CEO, MTV Networks
 Indra Nooyi, former CEO, PepsiCo
 Jon Rubinstein, former chairman and CEO, Palm, Inc.
 Patty Stonesifer, president and CEO, Martha's Table
 Wendell P. Weeks, chairman, president and CEO, Corning Inc.
Logo of Company

Financial results for its fourth quarter ended December 31, 2020.

 Operating cash flow increased 72% to $66.1 billion for the trailing twelve months,
compared with $38.5 billion for the trailing twelve months ended December 31, 2019.
 Free cash flow increased to $31.0 billion for the trailing twelve months, compared with
$25.8 billion for the trailing twelve months ended December 31, 2019.
 Free cash flow fewer principal repayments of finance leases and financing
obligations increased to $20.3 billion for the trailing twelve months, compared with
$16.2 billion for the trailing twelve months ended December 31, 2019.
 Free cash flow less equipment finance leases and principal repayments of all other
finance leases and financing obligations increased to $21.4 billion for the trailing
twelve months, compared with $12.5 billion for the trailing twelve months ended
December 31, 2019.
 Common shares outstanding plus shares underlying stock-based awards totalled
518 million on December 31, 2020, compared with 512 million one year ago.

Fourth Quarter 2020

pg. 16
  Net sales increased 44% to $125.6 billion in the fourth quarter, compared with $87.4
billion in fourth quarter 2019. Excluding the $1.7 billion favorable impact from year-
over-year changes in foreign exchange rates throughout the quarter, net sales increased
42% compared with fourth quarter 2019.
 Operating income increased to $6.9 billion in the fourth quarter, compared with
operating income of $3.9 billion in fourth quarter 2019.
 Net income increased to $7.2 billion in the fourth quarter, or $14.09 per diluted share,
compared with net income of $3.3 billion, or $6.47 per diluted share, in fourth quarter
2019.

Full Year 2020

 Net sales increased 38% to $386.1 billion, compared with $280.5 billion in 2019.
Excluding the $1.4 billion favourable impact from year-over-year changes in foreign
exchange rates throughout the year, net sales increased 37% compared with 2019.
 Operating income increased to $22.9 billion, compared with operating income of
$14.5 billion in 2019.
 Net income increased to $21.3 billion, or $41.83 per diluted share, compared with net
income of $11.6 billion, or $23.01 per diluted share, in 2019.

Amazon is also announcing today that Jeff Bezos will transition to the role of Executive
Chair in the third quarter of 2021 and Andy Jassy will become Chief Executive Officer at that
time.

“Amazon is what it is because of invention. We do crazy things together and then make
them normal. We pioneered customer reviews, 1-Click, personalized recommendations,
Prime’s insanely-fast shipping, Just Walk Out shopping, the Climate Pledge, Kindle, Alexa,
marketplace, infrastructure cloud computing, Career Choice, and much more,” said Jeff Bezos,
Amazon founder and CEO. “If you do it right, a few years after a surprising invention, the new
thing has become normal. People yawn. That yawn is the greatest compliment an inventor can
receive. When you look at our financial results, what you’re actually seeing are the long-run
cumulative results of invention. Right now, I see Amazon at its most inventive ever, making it
an optimal time for this transition.”

pg. 17
 2.Review of Literature
Internet and e-commerce are closely wrapped towards developed countries.
But they can achieve tremendous benefits to developing countries if it is applicable as an ideal
business purpose. Ecommerce is a revolution in business practices.(Ohidujjaman, et al 2013).
The term commerce is viewed as transactions conducted between business
partners. Electronic commerce is an emerging concept that describes the process of buying and
selling or exchanging of products, services and information via computer networks including
internet (Anupam-2011).
Commercial transactions involve the exchange of value (e.g., money) across
organizational or boundaries in return for products and services. Exchange of value is important
for understanding the limits of e-commerce. Without an exchange of value, no commerce
occurs (Laudon and Traver). E-business has changed processes within and between enterprises.
Electronic Data Interface (EDI), widely introduced twenty-five years ago on dedicated links
between firms, showed how information could be directly passed from the operating systems
of one enterprise into the order processing, production and logistics systems of another
(Clayton and Criscuolo).
If implemented properly, E-commerce technologies can result in business
process improvements and increased efficiencies. Leveraging Ecommerce technologies should
result in improvements to developing countries, but so far have not produced the desired results
(Jeffrey S. Ray-2011). The development experienced in internet and other global online
networks have, thus, created new commercial.
Opportunities for e–commerce and creation of completely new sets of global
and national trading relationships. This, consequently, led to the perception that e-banking and
e-commerce are now an inevitable aspect of financial services. It enables multiple buyers and
sellers to come together on a common platform and conduct business without compromising
individual requirements and relationships among the participants very quickly; (Harris and
Spencer, 2002; Bairagi, 2011).
Electronic commerce is creating new opportunities to the global economic,
for example in global travel and tourism industry. Transforming from traditional business
method to electronic commerce method is hard and there were many different factors for
companies to adapt them with electronic commerce factors (Nanehkaran, 2013). (Hasan, 2010)
pointed out that nowadays e-commerce industries have increasingly become a necessary
component of business strategy and a strong catalyst for economic development.
E-commerce has been regarded as buying and selling products and services
using the internet. The business model is designed to provide its offerings online and allow the
consumers to select and purchase the desired products. Planning for an eCommerce business
is critical. This allows the firm to consider the related dynamics and implementation of the
business model consider the probable adversities and challenges that may arise during the
process and functionality.
The planning further considers the associated risks and limitations to which
the company may be exposed so that ineffective contingency plan may be developed through

pg. 18
critical planning and considerations. The other aspect is technology selection along with
mediums and approaches. The firm must select adequate technology to carry out the desired
tasks and activities to function online. In this regard, the considerations need to be made
according to the nature and type of customers and the capabilities resources, and kind of
business involved in the process. The technology usage may differ for various businesses and
their specific target audiences, and critical analysis in this regard could be conducted to ensure
optimum results
Kumar, Sameer, and Petersen, Palo (2006) understood how e-commerce had
affected companies' abilities to serve the customers' needs and raise their satisfaction level. The
research showed a direct correlation between the use of ecommerce and improved customer
service. In particular, e-commerce has improved the availability of information, reduced
processing errors, reduced response times, lowered costs of services, and has effectively raised
customer satisfaction and the level of service that customers expect to receive. The research
revealed that many businesses are transitioning to integrated e-commerce business operations.
This is being done with the expectation of lowering operational costs and significantly
improving their service offerings. The study is unique in applying the logistics regression
approach to multi-company data across various industries to analyze the impact of e-commerce
on the service aspect of business operations. It also addresses the research question – whether
e-commerce use in a business effectively raises customer service and overall business operation
to a more desirable quality.

pg. 19
 3.Research Methodology
E-Commerce contributes to economic efficiency in five important ways. They include
shrinking distances and timescale, lowering distribution and operational costs, speeding
product development, providing more information to buyers and sellers, and enlarging
customer choice and supplier reach (Turban et al, 2000).

OBJECTIVES OF THE STUDY

1. To examine the role of E-commerce in reducing operational cost in an organization.

2. To identify other benefits accruable from E-commerce in Nigeria.
3. To identify the limitations and disadvantages of E-commerce in Nigeria.
4. To examine the role of E-commerce in reducing operational costs in Amazon in India.
5. To identify the limitations and disadvantages of E-commerce in India.
6. To research the impact of E-trade in diminishing an agency's expenditure.
7. To explore what in addition benefits may be garnered from E-commerce in India.

Reducing Operating Cost

Another way of how AI improves the efficiency of a company is reducing operating costs.
Operating (or operational) costs are expenses related to the core operations of your company.
These costs depend on the type of business, but they can consist of the following components:

 Salary expenses

 Maintenance and repair costs

 Office rent

 Travel expenses

 Marketing costs

The study is descriptive and analytical and based on primary data. It aims at studying the
role of e-commerce in reducing operational costs in Amazon in India. Primary Data was
collected through a questionnaire e-mailed to 112 senior officials working in Amazon.
Descriptive statistics such as mean, standard deviation, and percentage were used. Exploratory
data analysis and logistics regression were used to analyse data collected from the survey. The
analysis showed that companies had improved the level of service they can provide to their
customers with e-commerce. Independent Variables: The main operational costs incurred by
Amazon were storage, distribution, inventory, salaries, and wages of employees.

pg. 20
 4.Data Analysis and Interpretation

Trade Name: Amazon

Type: Public

Founded: July5, 1994; 28 years ago

Founder: Jeff Bezos

Revenue: US$ 469.822 billion (2021)

Operating income: US$24.879 billion (2021)

Net income: US$33.364 billion (2021)

Number of employees: 1,544,000 (September 2022)

Table 1: Reduction of Cost in Amazon

The table shows respondents' opinions concerning the reduction of cost in

Amazon. 54 respondents (48.2%) agreed that the operational costs of Amazon were reduced
after improving the process of information flow. 47 respondents (42%) opined that the

pg. 21
operating costs of Amazon were reduced after enhancing the coordination of business.
54respondents (48.2%) opined that e-commerce reduced administrative costs such as
distribution. 48 respondents (42.9%) opined that processing errors had been reduced in
Amazon with improved communication technology. 50 respondents (44.6%) stated that
Amazon's response time had been reduced with improved communication technology. 59
respondents (52.7%) agreed that with improved information flow and communication
technology, response time towards customer queries has reduced in Amazon.

Testing of Hypothesis
H01: There is no significant relationship between E-commerce and reduced operational cost in
Amazon.
H1: There is a significant relationship between E-commerce and reduced operational cost in
Amazon.

Table 2: Results of Regression

From the above regression analysis, R obtained was 0.874, and the R Square value was 0.763.
Further, the adjusted R square value was 0.122, which indicated the significance of explanatory
variables (E-commerce and reduced operational cost). The value obtained for the standard error
of estimate is 0.1057.

Table 3: Results of ANOVA

Source: Output from SPSS

The Regression ANOVA table revealed significant mean differences in components of E-
commerce and reduced operational cost in Amazon. F test revealed a significant mean
difference with an F value of 7.28 and a significance level of 0.001, which is less than p (0.05),
showing a statistical significance between E-commerce and reduced operational cost in
Amazon.

Table 4: Unstandardized and Standardized Coefficients with t values and significance

pg. 22
Source: Primary Source, Output from SPSS
The regression coefficient of operational costs is 3.460, indicating a relationship between E-
commerce and reduced operating cost in Amazon, which is statistically significant as the
significance value is lesser than 0.05 (5%)

WHERE TO REDUCE OPERAATIONAL COSTS

1. Remove unnecessary services

2. Focus on quality
3. Negotiate with suppliers
4. Consider drop shipping
5. Adjust your marketing strategy
6. Go green[er]
7. Revaluate your cybersecurity plan
8. Adopt automation when possible
9. Outsource, outsource, outsource

1.REMOVE UNNECESSARY SERVICES

This cost reduction strategy makes the very top of the list for obvious reasons.
“Trimming the fat” can go a long way after all! If you have any operating expenses that aren’t
entirely necessary for the viability of your business, they should be placed as a lower priority
and only kept in the budget if there’s room after the more important expenses are covered.

Unnecessary services could include things like hosting weekly happy hours or having
office yoga lessons once a month. While they’re definitely nice to have and can help build team
solidarity, they still aren’t crucial to the survival of your business.

2.FOCUS ON QUALITY

Avoid the mistake of just ‘getting by’ with products and services that are simply ‘good
enough’. High-quality items and high-quality customer support won’t only help reduce returns,
refunds, and dissatisfied customers – they’ll also help with your goals for operational cost

pg. 23
reduction. It may cost your business a bit more time, attention, and money in the short-term,
but it will help save you more money in the long run.

3.NEGOTIATE WITH SUPPLIER

Over time if you’re able to prove to your suppliers that you’re a strong seller, you can
gradually build a closer and more reliable relationship with them. But that relationship works
as a two-way road; suppliers need your business as much as you need their services.

Use your history as an efficient e-commerce store as a bargaining chip to negotiate for
better prices from your suppliers. At the end of the day, they don’t want to lose your business
(particularly if you’re good at selling their products!). There’s nothing wrong with using your
expertise as part of your operational cost reduction strategy.

4.CONSIDER DROPSHIPPING

If cost reduction is what you’re aiming for, drop shipping is one of the best ways to go
about it. Since drop shippers don’t actually store any inventory themselves, they save a ton of
money that would otherwise be spent on owning, running, and maintaining a warehouse (or
even several warehouses).

In a more general sense, drop shipping is a favoured e-commerce model because it has
very low overhead costs compared to other types of e-commerce businesses, a limitless number
of products you can potentially sell, and lots of flexibility when it comes to management.

5.ADJUST YOUR MARKETING STRATEGY

Having an e-commerce advertising strategy in place to bring in more customers should

almost certainly rank as high-priority on your list of business expenses. But maintaining an
effective mar strategy doesn’t have to run up against your plans for business cost reduction!

There are two e-commerce marketing strategies that we recommend also including in
your list of cost reduction strategies: SEO (search engine optimization) and email marketing
campaigns. We’re not just saying that either – SEO and email marketing campaigns are both
staples of Becomes marketing strategy.

Why? Because SEO is completely free and is proven to be more effective than pay-per-
click advertising in search engines. And because email marketing consistently ranks
as the most cost-effective type of online marketing with a median ROI of 122%. Enough said.

pg. 24
6. GO GREEN(ER)

Cost reduction can actually go hand-in-hand with reducing your business’s carbon
footprint. Naturally, e-commerce businesses are more sustainable than many (if not most)
offline businesses just by virtue of the fact that they use fewer utilities, take up less space, and
create much less waste.

Those differences also have a direct impact on the number and size of expenses that
your business pays – so what can you do green your business even more? Start investing in
appliances that are designed to be more energy-efficient. Even better, save electricity by not
only turning off appliances when you log off at night but actually unplugging computers and
other machines if possible. Use natural lighting if your workspace allows for it.

7.REVALUATE YOUR CYBERSECURITY PLAN

Do you currently have a small business cybersecurity plan? If not, you should take into
consideration the fact that the average cost of a cyber-attack on a small business comes out to
be roughly $35,000. Implementing a cybersecurity plan could end up saving you a significant
amount of time, stress, and money.

On the other hand, if you already have a cybersecurity plan in place, it’s still possible
to incorporate cost reduction into that plan. See what sort of price negotiations can be made
with cyber security service providers; educate employees on how to take cybersecurity into
their own hands; back up your data on a regular basis so as to avoid major losses if there ever
is a system breach.

8. ADOPT AUTOMATION WHEN POSSIBLE

Operational cost reduction can be done by employing the power of technology. That
doesn’t necessarily mean firing employees and replacing them with robots. In contrast, you can
give your team members a real upper hand by providing them with advanced tools to help
streamline their work.

You can integrate automation to help reduce online shopping cart abandonment,
respond to reviews, organize customer support tickets, and much more. Automation as a cost
reduction strategy can also help maintain that high-quality customer service mentioned earlier
on the list.

9.OUTSOURCE

pg. 25
 Running, an online business means that you can outsource a great number of items on
your list of business expenses. Much (if not most) of the time, outsourcing services will be
cheaper than keeping an employee on payroll to fill a role that only needs filling on an
occasional basis. Curious which services your e-commerce business can outsource?

How Business Cost Reduction Can Help Your Ecommerce Store Stay
Competitive

Saving money is always a nice thing – who doesn’t like an extra buck here and there?
But that’s not the bottom line for businesses using cost reduction strategies. Indeed, the real
goal of business cost reduction is to increase your business profit so that you can continue
growing your business and stay ahead of the competition. The best way to do this is to track all
your business profits and expenses using a tool like Be Profit for example.

Reducing costs will help you increase your business’s revenue, put more money into
lead generation, reduce your business’s pricing strategy, and more.

What is the role of e-commerce in reducing operational cost in an organization?

The importance of e-commerce to reduce costs accrue to the manufacturers or vendors in speed
in the processing of electronic stores and low-cost inception compared to the processing of
traditional stores, which leads to a reduction in the cost of business performance, and increase
the scope of supply markets, including.

Reducing your eCommerce operating costs is beneficial as it helps you maintain a

healthy, self-regulating, and growing business, without the fear that you might lose your
customers to the competition or that you might be forced to shut down.

10. Ways to Reduce your eCommerce Operating Costs

o Lower product returns
o Lower your inventory costs
o Negotiate better terms with suppliers
o Negotiate better transaction fees
o Use your marketing budget more effectively
o Leverage automation
o Use more sustainable packaging
o Focus on quality service
o Consider drop shipping
o Outsource non-critical functions

Operating Cost Ratio

What are the components of operating cost ratio?

Like expense ratio, it is expressed in percentage. The basic components of the formula
are operating cost and net sales. Operating cost is equal to cost of goods sold plus operating

pg. 26
expenses. Non-operating expenses such as interest charges, taxes etc., are excluded from the
computations.

Below are the two most important data points that you can obtain through operating
costs, your operating income and operating expense ratio.

Formula:

Operating ratio is computed as follows:

Operating income

Operating income is the total profit associated with your company’s operations. The
formula to calculate operating income is:

Operating Income = Total Revenues – Operating Costs

Example: So, imagine that a company earned $552,000 in revenue last year and has $100,000
in operational expenses. The operating income for the year would be $452,000.

 If you run a Fortune 500 company, those results may not be ideal. But if you’re an
entrepreneur who just opened your company last year, you’re probably jumping for
joy.
 A good operating income is relative and doesn’t necessarily give a strong indication of
financial health due to the scale of different businesses.

Operating expense ratio

The operating expense ratio, on the other hand, does indicate financial health. By
measuring efficiency as a percentage, it’s easier to compare yourself to others in your industry,
no matter how big or small your business is.

Operating expense ratios (OER) give you a direct comparison of your expenses to your
income, allowing you to track your efficiency. The equation for OER is:

Operating Expense Ratio = Operating Costs ÷ Total Revenues

Based on our example above, we would come up with:

OER = $100,000 ÷ $552,000 = .1812 × 100 = 18.

pg. 27
  For instance, banks have low operating expense ratios, sometimes as little as 0%.
 Others, like the building materials industry, have OERs as high as 73%.

You should pay closer attention to how you rank within your industry. If you find ways to
meet or beat the industry average, that can be a great indicator of success.

How to reduce operational costs without impacting the delivery of services?

 Automate And Refine Business Processes The most effective way to reduce
operational costs without a negative impact on the delivery of services is to bring in
business process management software that automates processes that are currently
being done manually. ...
 Outsourcing ...
 Cut Down on Office Space ...
 Go Green and Reduce Operational Costs ...
 Improve Financial Processes ...

Let's resume the rest of this article! The most effective way to reduce operational costs without
a negative impact on the delivery of services is to bring in business process management
software that automates processes that are currently being done manually.

What does it mean to improve your operating costs?

Improving your operating costs means putting yourself ahead of your competition. Small
business owners should always be looking for ways to reduce their operating costs without
sacrificing the quality of their offering or making the lives of their employees more difficult.
So, what are the best ways to reduce operating costs?

pg. 28
 Amazon annual/quarterly operating expenses history and growth rate from 2010 to 2022.
Operating expenses can be defined as the sum of all operating expenses for the given industry.

 Amazon operating expenses for the quarter ending June 30, 2022 were $117.917B,
a 11.9% increase year-over-year.
 Amazon operating expenses for the twelve months ending June 30, 2022
were $470.604B, a 13.76% increase year-over-year.
 Amazon annual operating expenses for 2021 were $444.943B, a 22.52% increase from
2020.
 Amazon annual operating expenses for 2020 were $363.165B, a 36.54% increase from
2019.
 Amazon annual operating expenses for 2019 were $265.981B, a 20.64% increase

What is total cost?

Total cost refers to the overall cost of production, which includes both fixed and
variable components of the cost. In economics, the total cost is described as the cost that is
required to produce a product.

What are the different types of operating expenses?

It is noteworthy that the same category of an operating expense can be either a fixed
cost or a variable cost, depending on the situation. For example, the wage for a full-time office
employee is a fixed cost to the company, while the wage for an assembly line factory worker
can be identified as a variable cost.

How to calculate total cost of production?

pg. 29
 Total Cost of Production is calculated using the formula given below

Total Cost = Total Fixed Cost + Average Variable Cost Per Unit * Quantity of
Units

Produced Total Cost of Production is calculated using the formula given below

pg. 30
How much profit did Amazon make in 2021?

Amazon gross profit for the quarter ending September 30, 2021, was $47.882B, a
22.65% increase year-over-year. Amazon gross profit for the twelve months ending September
30, 2021, was $189.172B, a 35.17% increase year-over-year. Amazon annual gross profit for
2020 was $152.757B, a 32.85% increase from 2019.

What are Amazon’s operating expenses?

Operating expenses can be defined as the sum of all operating expenses for the given
industry. Amazon operating expenses for the quarter ending March 31, 2021, were $99.653B,
a 39.45% increase year-over-year. Amazon operating expenses for the twelve months ending
March 31, 2021, were $391.355B, a 38.7% increase year-over-year.

How do you implement a cost reduction strategy?

 Cut employee costs The most significant cost in a business process is associated
with workers, which means that your profit margin can be enhanced by finding ways

pg. 31
 to reduce labour costs. There is various leeway to accomplish this such as finding
ways to make employees more efficient or reduce their salaries. ...
 Reduce material expenses ...
 Cut overhead fees ...
 Spend to save ...
 Robot-based operations ...

STATEMENT OF THE PROBLEM

Electronic commerce is a popular topic in business management, mass media and in

informatics circles as well. Perhaps its impact is most visible in the areas of financial services
and retailing. Many E-Commerce initiatives have risen in a short period of time. Those
initiatives include innovative smart cards to facilitate E-Commerce, remote payments and
electronic checking, online trading of stocks, bonds and related financial instruments, online
banking, and online retailing (e-tailing). However, its effect on the reduction of operational
cost of organization has been examined in a number of ways comparatively to brick and mortar
organizations for instance the money received for every transaction will pay for the item; it will
also contribute to the salesperson salary, credit card fees, lease on storefront, electricity,
telephone, heating/cooling, taxes, displays, repairs and maintenance to the building. However,
the money received for an E-Commerce transaction pays for the item, web hosting, shopping
cart software, distribution and little else. The cost overall of maintaining a virtual store is far
less than that of a brick-and-mortar store.

SIGNIFICANCE OF THE STUDY

The following are the significance of this study:

1. The outcome of this study will educate business managers and the general public on
the role of E-commerce in reducing the operational cost of business organizations.
2. This research will be a contribution to the body of literature in the area of the effect
of personality trait on student’s academic performance, thereby constituting the
empirical literature for future research in the subject area

SCOPE/LIMITATIONS OF THE STUDY

This study will cover the benefits of E-commerce with special focus on its influence as
regards operational cost reduction in business organizations.

LIMITATION OF STUDY

Financial constraint– Insufficient fund tends to impede the efficiency of the researcher in
sourcing for the relevant materials, literature or information and in the process of data
collection (internet, questionnaire and interview).

pg. 32
Time constraint– The researcher will simultaneously engage in this study with other
academic work. This consequently will cut down on the time devoted for the research work

The importance of e-commerce to reduce costs

The importance of e-commerce to reduce costs accrue to the manufacturers or vendors

in speed in the processing of electronic stores and low-cost inception compared to the
processing of traditional stores, which leads to a reduction in the cost of business
performance, and increase the scope of supply markets, including beyond the limits of space
and time, and thereby to increase competition which results from the high-quality
products and low prices. (Anati, 2000, 36 ).
That the lower costs of business processes represent a trade transaction cost of gathering
information, negotiation and brokerage fees and sales commissions, administrative procedures
and other important part of the price of the product. And e-commerce plays a prominent role
in reducing these costs by improving information flow and increase the coordination of the
business, as well as lower costs of searching for information relating to potential buyers and
sellers in the market. (Samurai 1999.15-14 ).
Contribute to e-commerce to reduce administrative costs to the businesses in
distribution, archiving and retrieval of information paper, may end up reducing the
administrative costs of procurement operations to 85% of what eventually lead to lower
product prices. Good management of inventory as contributing to e-commerce to reduce
inventory through the use of a drug in the supply chain management system, where the
process begins with obtaining commercial demand from the buyer and provide him with his
application through industrialization temporary manner, and this would work to reduce
business cycle significantly; where the product is shipped directly from the factory to the
final buyer. This is shown dramatically in digital products, any goods and services that are
delivered electronically.
Thus, making e-commerce is an important tool in the management of inventory
and lower storage costs, and this has economic implications at the macro level if we know
that 10% of the volatility in the quarterly growth rates of production as a result of the volatility
of returns in investment in inventory. If e-commerce is working to reduce inventory to a
minimum, it is expected to be one of the effects of e-commerce is to mitigate the effects
of the business cycle resulting from the change in inventory. With the development of
information and communication technology and better information flow, it is expected to
decrease the impact of the stock of the business cycle to a minimum and perhaps even.

HOW TO REDUCES BUSINESS OPERATING EXPENSES

Before you can start with business cost reduction, you need to first identify what your
business costs are and which of those expenses have room for improvement. This may seem
like a tricky task at first glance, but it’s simply a matter of following the right steps.

First off, you will want to list out all of your e-commerce business’s operating expenses
and provide details including what the expenses are, how much they cost, the value they bring
back to your business (ROI), how long you’ve been paying those expenses, and any other
relevant information.

pg. 33
 Once you’ve completed the list of your business’s operating expenses, you’ll want to
then prioritize them in order to determine whether how necessary they are for the successful
operation of your business. One of the easiest ways to measure the necessity of your business’s
operating costs is to measure the ROI for each expense. With those ROI values listed, you can
get a better idea of where you should look for opportunities to make business cost reductions.

If you have business expenses that you identify as ‘nice-to-haves’ (low ROI’s), you’ll
definitely want to find ways to reduce those costs and perhaps even consider doing away with
them completely. For those expenses that you deem to be more necessary (higher ROI’s), you
should still start working on developing cost reduction strategies (see more on that below).

Does e-commerce reduce operational costs in an organization?

However, this study is focused on the role of E-Commerce in reducing operational costs
in an organization. Whether one order or thousands come in, the operating cost varies across
the E-Commerce business.

What are the benefits of ecommerce business?

EBusiness can help manage operating costs in many areas, thereby reducing the cost of
individual transactions. ECommerce business is able to reduce labor and other costs in many
areas, including document preparation, reconciliation, mail preparation, telephone calling, data
entry, overtime and supervision expenses.
It is possible to maintain an ecommerce store with low overhead cost, unlike an offline store.
Running a physical store involves high operational costs. Businesses have to spend money on
inventory, maintenance, rent, staffing costs, etc. For ecommerce stores, all of these factors are
reduced to a minimum.

It is found that ecommerce stores help to reduce operational cost by more than 60%.
Since no physical storefront is needed, the costs related to maintenance, bills, rent, etc., is not
applicable. Further, ecommerce stores require only fewer staff members. So, the staffing
expense is also manageable.

Having a physical store for your business is a financially taxing process. It requires a
large amount of investment in the form of retail space and store design. For small to medium
business owners, this poses a big challenge. Further, this large investment affects the pace of
ROI adversely.

The benefits of ecommerce in this aspect is a blessing. E-commerce eliminates the need
for a physical storefront. The only space you would need to run an ecommerce business is
storage spaces, which are way less costly than retail space. This makes setting up an ecommerce
store more affordable.

The few cost reduction essentials every business should know are:

 Cost reduction must involve reducing and not cutting out costs entirely.
 The reduction measures should not affect the processes and product quality.
 The manufacturing process should be changed without affecting product quality or
nature.
 Cost reduction should never be a short-term process; rather, it should be more of a
long-term solution

pg. 34
 Indeed, the real goal of business cost reduction is to increase your business profit so that
you can continue growing your business and stay ahead of the competition. The best way to do
this is to track all your business profits and expenses using a tool like Be Profit for example.

Amazon Cost Management Solutions

 Organize and report cost and usage based on user-defined methods

You need complete, near real-time visibility of your cost and usage information to make
informed decisions. We equip you with tools to organize your resources based on your needs,
visualize and analyse cost and usage data in a single pane of glass, and accurately chargeback
to appropriate entities (e.g., department, project, product). Rather than centrally policing the
cost, you can provide real-time cost data that makes sense to your engineering, application, and
business teams. The detailed, allocable cost data allows teams to have the visibility and details
to be accountable of their own spend.

 Billing with built-in control

Business and organization leaders need a simple and easy way to access billing
information, including a spend summary, a breakdown of all service costs incurred by accounts
across the organization, along with discounts and credits. Customer can choose to consolidate
your bills and take advantage of higher volume discounts based on aggregated usage across

pg. 35
your bills. Leaders also need to set appropriate guardrails in place so you can maintain control
over cost, governance, and security. We help organizations balance freedom and control by
enabling the governance of granular user permission.

 Improved planning with flexible forecasting and budgeting

Businesses and organizations need to plan and set expectations around cloud costs for
your projects, applications, and more. The emergence of the cloud allowed teams to acquire
and deprecate resources on an ongoing basis, without relying on teams to approve, procure and
install infrastructure. However, this flexibility requires organizations to adapt to the new,
dynamic forecasting and budgeting process. We provide forecasts based on your cost and usage
history and allows you to set budget threshold and alerts, so you can stay informed whenever
cost and usage is forecasted to, or exceeds the threshold limit. You can also set reservation
utilization and/or coverage targets for your Reserved Instances and monitor how they are
progressing towards your target.

 Optimize costs with resource and pricing recommendations

With us, customers can take control of your cost and continuously optimize you spend.
There are a variety of pricing models and resources you can choose from to meet requirements
for both performance and cost efficiency, and adjust as needed. When evaluating Amazon Web
Services service for your architectural and business needs, you will have the flexibility to
choose from a variety of elements, such as operating systems, instance types, availability zones,
and purchase options. We offer resources optimization recommendations to simplify the
evaluation process so you can efficiently select the cost-optimized resources. We also provide
recommendations around pricing models (up to 72% with Reserved Instances and up to 90%
with Spot Instances) based on your utilization patterns, so you can further drive down your cost
without compromising workload performance.

Operating Expenses of Amazon Company

Amazon is the largest e-commerce brand in the world and also a leading player in the
cloud industry. Its net revenue has experienced massive growth over the past few years driven
by increased global sales and higher sales of cloud-based services.

The net revenue of the company in 2019 grew to $280.5 billion compared to $232.9
billion in 2018. In 2021, its net sales have grown to $469.822 billion compared to $386.064
billion in 2020.

The popularity of Amazon's ecommerce platform as well as its cloud services has grown
a lot during recent years. While Amazon's net sales have grown rapidly, its operating expenses
have also grown faster, driven mainly by growth in research and development expenses as well
as the cost of sales and fulfilment costs.

There are many types of costs involved in running an ecommerce website that serves
millions of users worldwide. While cost of sales are the largest operating expenses incurred by
Amazon, the expenses related to research and development as well as fulfilment are also among
the most significant expenses for the ecommerce and cloud technology platform.

pg. 36
 The chart below shows the various types of costs and expenses incurred by Amazon
over the previous four years in its global operation of its ecommerce and cloud businesses. The
amounts are in millions.

Amazon's Operating
2018 2019 2020 2021
Expenses
Cost of Sales $139,156 $165,536 $233,307 $272,344

Fulfilment $34,027 $40,232 $58,517 $75,111

Technology and Content $28,837 $35,931 $42,740 $56,052

Marketing $13,814 $18,878 $22,008 $32,551

General and Administrative $4,336 $5,203 $6,668 $8,823

Other Operating Expenses net $296 $201 $(75) $62

Total Operating Expenses $220,466 $265,981 $363,165 $444,943

Cost of Sales:

Cost of Sales (in millions)

300000

250000

200000

150000
Cost of Sales

100000

50000

0
2018 2019 2020 2021

Amazon's cost of sales mainly includes the purchase price of the consumer products
that Amazon sells on its e-commerce platform, inbound and outbound shipping costs, including
costs related to sortation and delivery centres, as well as the costs of digital media and content
including video and music. The higher sales of Amazon in 2019 drove the growth in its cost of
sales in the year. With higher sales, the product costs as well as the shipping costs of the

pg. 37
company grew. Amazon includes costs of shipping for receiving products from its suppliers
in inventory.

These costs are recognized as cost of sales upon the sale of products to the customers.
The shipping costs of Amazon which include the costs of sortation as well as delivery centres
and transportation costs reached $37.9 billion in 2019 from $27.7 billion in 2018. In 2021, the
shipping costs of Amazon have grown to $76.7 billion compared to $61.1 billion in 2020.

In the future, Amazon's shipping costs are expected to continue to increase driven by
increased acceptance of the shipping offers from Amazon by its customers. The costs of
shipping will also increase because apart from reducing shipping rates and using more
expensive methods of shipping including faster delivery, the company also offers additional
services. Over time, Amazon will try to mitigate its shipping costs through higher sales volume,
optimization of its fulfilment network as well as by negotiating better terms with its suppliers
and by achieving higher operational efficiency. Offering lower prices is one of the core pillars
of the business strategy of Amazon and one way that the company offers its customers lower
prices is through shipping offers.

The company includes the costs of operating its AWS (Amazon Web Services) segment
in its research and development expenses which it includes as Technology and Content
expenses in its annual report (form 10K). It is because the company leverages a shared
infrastructure that supports both its internal technology needs and external sales to the
customers of Amazon web services.

Fulfilment costs:

Amazon's Cost Of Sales And Fulfilment Costs

100%

90%

80%

70%

60% Cost of Sales

50% Fulfilment
40%

30%

20%

10%

0%
2018 2019 2020 2021

The fulfilment costs of Amazon include the costs of staffing and operations of its North
American and International fulfilment centres, retail stores, customer service centres and
payment processing costs. The company includes the AWS payment processing and transaction

pg. 38
related costs as fulfilment costs but the other AWS costs are classified as technology and
content expenses.

The changes in fulfilment costs as a percentage of net costs reflect several things that include
changes in payment processing and transaction related costs, level of Amazon's productivity
and accuracy, changes in the volume, size and weight of the units received and fulfilled, the
extent of the utilization of Amazon fulfilment services by third parties, as well as the mix of
products and services sold by Amazon.

The fulfilment costs of Amazon increased in 2019 compared to the previous year due to several
factors and mainly due to the growth in variable costs which grew due to higher products and
services sales volume, inventory levels and costs incurred due to the expansion of Amazon's
fulfilment network and retail stores. In the future, Amazon plans to expand its fulfilment
network in order to accommodate a larger selection of products, and in stock inventory levels.

Technology and content (Research and Development Expenses)

Amazon classifies its research and development expenses as technology and content
expenses. These expenses mainly include the staffing expenses (payroll and related expenses)
for the employees engaged in research and development, as well as the employees involved in
the design and maintenance of its ecommerce platform and the infrastructure costs.
Infrastructures expenses of Amazon include the servers, networking equipment, data centres
related depreciation and amortization, rent, utilities and other expenses necessary for running
AWS as well as other Amazon businesses. The research and development costs of Amazon
grew in 2019 mainly due to increased costs of technological infrastructure and higher spending
on the payment and related costs of employees involved in research and development projects.

In 2021, Amazon's research and development expenses grew to $56,052 million compared to
$42,740 million in 2020.

Amazon's Marketing Expenses and R & d Expenses

100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
2018 2019 2020 2021

R & D Expenses Marketing Expenses

pg. 39
Marketing Expenses
The marketing expenses of Amazon mainly include the advertising expenses as well as payroll
and related expenses of staff employed in the marketing and sales functions, including sales
commissions related to AWS. Amazon uses several marketing channels for the marketing of
its ecommerce, Prime Video and AWS platforms. It uses sponsored search, third party
customer referrals, social and online advertising, television advertising and other various form
of marketing and promotional campaigns. The marketing costs of Amazon are largely variable
which is because of growing sales and changing advertising rates. Marketing costs can increase
or decrease based on increased or decreased competition as well as changes in the marketing
mix of the company.

Total Operating Expenses and Revenue

Amazon.com reported total operating expenses of $489.2 B for the latest twelve
months ending September 30, 2022 on its income statement.
The tables below summarize Amazon.com Total Operating Expenses and common
size over the last five years:

Year Total Operating Revenue % Revenue

Expenses

2017 173.8 B 177.9 B 97.7%

2018 220.5 B 232.9 B 94.7%

2019 266 B 280.5 B 94.8%

2020 363.2 B 386.1 B 94.1%

2021 444.9 B 469.8 B 94.7%

pg. 40
 % Revenue

20% 20%

2017
2018

20% 2019
20%
2020
2021

20%

Total Operating Expenses And Revenue

500

450

400

350
Total Operating
300 Expenses

250 Revenue
200

150

100

50

0
2017 2018 2019 2020 2021

Financial Statement of Amazon Company

Fiscal year is January-December. 2021 2020 2019 2018 2017

All values USD Millions.

Cash & Short Term Investments 96,309 84,653 55,342 41,676 32,321
Cash Only 36,480 42,379 36,413 32,176 21,857

pg. 41
Cash & Short Term Investments 13.77% 52.96% 32.79% 28.94% -
Growth
Cash & ST Investments / Total 22.90% 26.36% 24.57% 25.62% 24.61%
Assets
Total Accounts Receivable 32,631 24,285 20,495 16,251 11,829
Accounts Receivables, Net 32,631 24,285 20,495 12,174 7,665
Accounts Receivables, Gross 33,731 25,385 21,213 12,669 8,013
Bad Debt/Doubtful Accounts (1,100) (1,100) (718) (495) (348)
Other Receivables - - - 4,077 4,164
Accounts Receivable Growth 34.37% 18.49% 26.12% 37.38% -
Accounts Receivable Turnover 14.40 15.90 13.69 14.33 15.04
Inventories 32,640 23,795 20,497 17,174 16,047
Finished Goods 32,640 23,795 20,497 17,174 16,047
Total Current Assets 161,580 132,733 96,334 75,101 60,197
Net Property, Plant & Equipment 216,363 150,667 97,846 61,797 48,866
Property, Plant & Equipment - 294,882 211,101 144,821 95,770 72,656
Gross
Buildings 81,104 57,324 39,223 31,741 23,896
Machinery & Equipment 128,683 97,224 71,310 54,591 42,244
Construction in Progress 24,895 15,228 6,036 6,861 4,078
Other Property, Plant & Equipment 4,118 3,772 3,111 2,577 2,438
Accumulated Depreciation 78,519 60,434 46,975 33,973 23,790
Total Investments and Advances 3,415 3,022 711 1,517 1,400
Other Long-Term Investments 3,415 3,022 711 1,517 1,400
Intangible Assets 20,478 19,998 18,803 18,658 16,721
Net Goodwill 15,371 15,017 14,754 14,548 13,350
Net Other Intangibles 4,981 4,049 4,110 3,371
Other Assets 18,713 14,775 11,554 5,575 4,126
Tangible Other Assets 18,713 14,775 11,554 5,575 4,126
Total Assets 420,549 321,195 225,248 162,648 131,310
Assets - Total - Growth 30.93% 42.60% 38.49% 23.87% -
Asset Turnover 1.27 - - - -
Return On Average Assets 9.00% - - - -

pg. 42
 Assets of Amazon Company
450000

400000

350000

300000 Total Current

Assets
250000
Total Assets
200000

150000

100000

50000

0
2021 2020 2019 2018 2017

Amazon.com Profit and Loss Account. June-2000 Dec-99 to Dec-95

1,995 1,996 1,997 1,998 1,999 2,000

Net sales 1 16 148 610 1640 1152
Cost of sales 0 12 119 476 1349 888
Gross profit 0 3 29 134 291 264

Marketing and sales 0 6 40 133 413 270

Technology and content 0 0 13 46 160 128
Product development 0 2 0 0 0 0
General and administrative 0 1 7 16 70 55
Amortization of goodwill - - - 43 215 163
Merger, acquisitions - - - 4 8 4
Loss from operations 0 -6 -33 -109 -606 -378

Interest income 0 0 2 14 45 20
Interest expense - - 0 -27 -85 -61
Other income (expense), net - - - - 2 -8
Net interest income (expense) 0 0 2 -13 -37 -49

Net loss 0 -6 -31 -125 -720 -626

pg. 43
Amazon.com Change in Net Sales

3000%

2500%

2000%

1500%

1000%

500%

0%
1996-95 1997-96 1998-97 1999-98 2000-99

Cost of sales and gross profit: The cost of sales consist in the cost of merchandises sold
to customers, inbound and outbound shipping costs and the cost of supplies to package products
in order to be shipped. Even though this is the technical formula provided by Amazon.com, in
year 1999 to the cost of sales was added an inventory-related charge of approximately US$ 39
million. The proportion between cost of sales and net sales have been during the period 1995-
2000 around 80 percent, which leave us with a gross margin of 20% in net sales.

Amazon.com Structure of Net Sales and Cost of Sales (%)

100 100
90 90
80 80
70 70
60 60
50 50
40 40
30 30
20 20
10 10
0 0
NET SALES COST OF SALES

Shipping Package Supplies

ACN Profits Inbound Shipping
Sales of Products Merchandise

pg. 44
 It is important to note that earnings from ACN are expected to increase in coming years,
but the income received from this area does not include only cash. This amount includes also
equity securities of public and private companies that represent 61 percent of the total. In
addition, the majority of cash comes from an inventory sale.
Segment information: As we can appreciate in Figure-6, there are considered three main
segments: US Music and DVD/Video, where it is included all sales on this segment only for
the United States Territory. International, includes all sales from abroad 1 and finally Early-
Stage Business, includes income from early stage products and services in the US territory.

Amazon.com segment profit and loss. June years 00-99

SIX MONTHS ENDED JUNE 30 2000

NET SALES GROSS PROFIT SEGMENT LOSS
US MUSIC AND DVD/VIDEO 68% 64% -4.3%
INTERNATIONAL 13% 12% 33%
EARLY-STAGE BUSINESSES 19% 23% 71%
CONSOLIDATED 100% 100% 100%

SIX MONTHS ENDED JUNE 30 1999

NET SALES GROSS PROFIT SEGMENT LOSS

US MUSIC AND DVD/VIDEO 90% 91% 14%
INTERNATIONAL 9% 9% 31%
EARLY-STAGE BUSINESSES 1% 0% 55%
CONSOLIDATED 100% 100% 100%

Operating Expenses: The negative effect of operating expenses on gross margin,

especially in the case of marketing, goodwill and technology is particularly important.
Marketing expenses include advertising and fulfilment costs. The first one represents expenses
devoted to promotions and public relations. Fulfilment costs represent those expenses in
operating and staffing distribution and customer services centres, including costs of receiving,
inspecting and maintaining inventories plus the preparation of customers’ orders. From a total
of US$ 270 million of marketing expenses at the end of June-2000, 70 percent came from
fulfilment costs and the remaining from advertising. Marketing costs represented in average
from 1995 to 1999 almost 50 percent of total operating expenses. Technology and content
expenses consist of payrolls and related expenses for development of systems and consultants.
General and administrative expenses consist of payroll and other expenses for executives,
finance and administrative personnel and other corporate expenses.
The last account considered in our analysis of operational costs is depreciation of
goodwill and merger acquisition costs. These accounts appeared for the first time in 1998 when
Amazon.com acquired three Internet companies. This acquisition process became even more
important during 1999 and 2000 and is expected to continue growing thus the depreciation of
goodwill. As can be appreciated in Figure-7, marketing expenses represent 42 percent of the

pg. 45
total, followed by depreciation of goodwill (25%), technology (20%) and general and
administrative (8%).

Amazon.com Structure of Operational Costs (%)

100
90
80 Amortization of goodwill
70
General and administrative
60
50 Technology and content
40
Marketing and sales
30
20
10
0
OPERATIONAL COSTS

Deducting from gross profit the amount of total operational expenses we can obtain the
profit or loss from operations, which for the case of Amazon is a loss and increasing each year.
Now the question that may come to our minds is the following. Are these losses completely
“real” or is there something to deal with the accounting methods? Probably the problem is that
we are measuring a new economy firm with and old fashion rule. For example, when a company
builds a factory the accountants never include the total cost as an expense for the first year.
Usually, this is capitalized over the expected useful life of the factory.
In Dot-Com companies what we have is that all costs of building their factories are
recorded as expenses for that year. Other important expenses that we have seen such R&D,
advertising and marketing (almost 72% of total expenses in the case of Amazon.com) are
expenses that for an old economy firm should be fine to account for them in the same year. But
in the case of an Internet company these are expenses that will influence the future of the
business in a particular way, totally different than in the old economy firms. For example, let’s
consider Amazon.com expenses in marketing & technology and simulate four different
scenarios. Escenario-1: assumes the original values, escenario-2 assumes three years of useful
life for these expenses, escenario-3 assumes five years of useful life for these expenses. And
finally escenario-4 assumption is the necessary number of years to make average profits for the
years 1995-2000 zero2. Now the profits completely change. As we see in Figure-8
Amazon.com would have had positive profits from 1995 to 1998 starting to decline from 1999
when the company made an important investment in acquire several Internet companies.

pg. 46
 1996 1997 1998 1999 2000
100
0
-100
-200 Original
-300 3 years
-400 5 years
29 years
-500
-600
-700

Depending on how we want to approach this issue we will end up with different
conclusions about the accounting in Internet companies. But we will see that some of these
conclusions are indeed important to show fair results about the economic situation of the firm.
According to the present accounting rules, it is forecasted that Amazon.com will
continue to have losses in the coming years because of the marketing expenses and the
introduction in new markets. By the end of the year 2000, the expected losses are 427 million
dollars. These losses will be higher than the amount forecasted because there have been less
sales in the segments with more gross margin. By other hand, in the last’s months of the year
2000, Amazon.com has sent a lot of products without charging the mailing cost to the
customers. In the next future, a key success factor will be the increase in segments with more
gross margin, like electronic products, for example.

pg. 47
 5.CONCLUSION
The study showed the statistical analysis results on the operational costs of storage,
distribution, inventory, salaries, and employees' wages. It was found that the company is
seeking to benefit from the advantages of using e-commerce to reduce operational costs. It also
showed that the company is interested and allows the exchange of experiences and © 2022
JETIR February 2022, Volume 9, Issue 2 www.jetir.org (ISSN-2349-5162) JETIR2202032
Journal of Emerging Technologies and Innovative Research (JETIR) www.jetir.org a265 views
with customers through electronic commerce and efficient access of information, reduced
processing errors, reduced response times, and lowered services costs.
It also showed that the company is interested in using electronic commerce to meet the
needs and requirements of customers and achieve the highest degree of satisfaction to have.
Hence. It is suggested to Amazon to enable e-commerce companies and businesses to
coordinate strategy and resources and skill composition of long-term relationships, particularly
those institutions or dense information technology companies, and through electronic networks
that allow information sharing Showed the results of statistical analysis on the variable
costs of storage and distribution that the company is seeking to benefit from the advantages
of using e-commerce to reduce the stock of the company and the salaries and wages of
employees in stores and reduce the costs of traveling to the target markets and lower
insurance expenses on stores and expenses stationery and consumption of machinery and
equipment used in the stores. It also showed that the company is interested and allow
the exchange of experiences and views with customers through the use of electronic
commerce and access to any inquiry or consulted by them. It also showed that the company
is interested through the use of electronic commerce to meet the needs and requirements of
customers and achieve the highest degree of satisfaction to have.
It also showed the results of statistical analysis on the variable salary costs that the
company studied is seeking through the use of electronic commerce in marketing their
products to reduce the costs of salaries and wages and reward staff and employees in the
Department of Advertising and reduce the cost of training programs and courses that are held
in the Department of Advertising and the rest of the sections. Showed the results of statistical
analysis on the variable costs of storage and distribution that the company is seeking to
benefit from the advantages of using e-commerce to reduce the stock of the company and the
salaries and wages of employees in stores and reduce the costs of traveling to the target
markets and lower insurance expenses on stores and expenses stationery and consumption
of machinery and equipment used in the stores.
It also showed that the company is interested and allow the exchange of experiences and
views with customers through the use of electronic commerce and access to any inquiry or
consulted by them. It also showed that the company is interested through the use of electronic
commerce to meet the needs and requirements of customers and achieve the highest degree
of satisfaction to have. It also showed the results of statistical analysis on the variable
salary costs that the company studied is seeking through the use of electronic commerce in
marketing their products to reduce the costs of salaries and wages and reward staff and
employees in the Department of Advertising and reduce the cost of training programs and
courses that are held in the Department of Advertising and the rest of the sections.
Showed the results of statistical analysis on the variable costs of storage and
distribution that the company is seeking to benefit from the advantages of using e-commerce
to reduce the stock of the company and the salaries and wages of employees in stores and
reduce the costs of traveling to the target markets and lower insurance expenses on stores
and expenses stationery and consumption of machinery and equipment used in the stores. It

pg. 48
also showed that the company is interested and allow the exchange of experiences and
views with customers through the use of electronic commerce and access to any inquiry or
consulted by them. It also showed that the company is interested through the use of electronic
commerce to meet the needs and requirements of customers and achieve the highest degree
of satisfaction to have. It also showed the results of statistical analysis on the variable
salary costs that the company studied is seeking through the use of electronic commerce
in marketing their products to reduce the costs of salaries and wages and reward staff and
employees in the Department of Advertising and reduce the cost of training programs and
courses that are held in the Department of Advertising and the rest of the sections.

Set up your organization for success by having shared goals. Ensure that everyone
understands their part in achieving business outcomes and how they impact the ability of others
to succeed. Provide support for your team members so that they can support your business
outcomes.

Every operational event and failure should be treated as an opportunity to improve the
operations of your architecture. By understanding the needs of your workloads, predefining
runbooks for routine activities, and playbooks to guide issue resolution, using the operations
as code features in AWS, and maintaining situational awareness, your operations will be better
prepared and able to respond more effectively when incidents occur.

Through focusing on incremental improvement based on priorities as they change, and

lessons learned from event response and retrospective analysis, you will enable the success of
your business by increasing the efficiency and effectiveness of your activities.

AWS strives to help you build and operate architectures that maximize efficiency while
you build highly responsive and adaptive deployments. To increase the operational excellence
of your workloads, you should use the best practices discussed in this paper.

E-commerce still represents one of the business methods that take advantage if done
the right way, even if the stock market and commodities fell, but E-Commerce still able to
survive and receive high transaction. E-commerce has a tremendous opportunity in the course
of or business in Malaysia. In addition, it is also to introducing new techniques and styles in a
transaction. Use the extensive E-Commerce in the Internet world is actually much better to
bring the goodness of the individual or the state.

E-Commerce has undeniably become an important part of our society. The successful
companies of the future will be those that take E-Commerce seriously, dedicating sufficient
resources to its development. E-Commerce is not an IT issue but a whole business undertaking.
Companies that use it as a reason for completely re-designing their business processes are likely
to reap the greatest benefits. Moreover, E-Commerce is a helpful technology that gives the
consumer access to business and companies all over the world.

The internet has opened so many opportunities for doing business online, and e-
commerce is one of the most popular ones. Not only does it require low investment, it actually
is a type of business that does not require a full-time commitment, especially if you are selling
a limited number of products.

Showed the results of statistical analysis on the variable costs of storage and
distribution that the company is seeking to benefit from the advantages of using e-commerce
to reduce the stock of the company and the salaries and wages of employees in stores and

pg. 49
reduce the costs of traveling to the target markets and lower insurance expenses on stores
and expenses stationery and consumption of machinery and equipment used in the stores. It
also showed that the company is interested and allow the exchange of experiences and views
with customers through the use of electronic commerce and access to any inquiry or consulted
by them. It also showed that the company is interested through the use of electronic commerce
to meet the needs and requirements of customers and achieve the highest degree of satisfaction
to have.
It also showed the results of statistical analysis on the variable salary costs
that the company studied is seeking through the use of electronic commerce in marketing their
products to reduce the costs of salaries and wages and reward staff and employees in the
Department of Advertising and reduce the cost of training programs and courses that are held
in the Department of Advertising and the rest of the sections.
eCommerce businesses must remain competitive failure to which they will run out of
business. To keep up with online sellers like Amazon and to maintain a healthy, self-regulating,
and growing business, it is essential to keep your operating costs on the low.

This said, there are several ways to reduce your eCommerce operating costs, including
developing strategies to lower product returns and inventory costs, negotiate better terms with
suppliers, and negotiate better transaction fees.

You should also make good use of your marketing budget, while leveraging
automation, outsourcing, sustainable packaging, and drop shipping. Remember to focus on
offering high quality services for increased customer retention and reduced customer
acquisition costs.

pg. 50
 6.Bibliography
Websites:
1. https://www.ijres.org/papers/Volume-10/Issue-7/1007854858.pdf

2. https://www.researchgate.net/publication/330359333_The_Role_of_E-
Commerce_to_Reduce_Costs_and_its_Impact_on_Small_Medium-
Sized_Companies
3. https://nairaproject.com/projects/1291.html
4. https://smallbusiness.chron.com/ecommerce-can-reduce-business-transaction-
costs-3503.html
5. https://www.iiste.org/Journals/index.php/RJFA/article/download/26910/27593
6. https://www.iiste.org/Journals/index.php/RJFA/article/download/26910/27593
7. https://www.become.co/blog/e-commerce-operational-cost-reduction-strategy/

pg. 51