Amazon: Online Sales

Amazon sells books, music, and many other items over the Internet and is one of the pioneers
of online consumer sales. Amazon, based in Seattle, started by filling all orders using books
purchased from a distributor in response to customer orders. As it grew, the company added
warehouses, allowing it to react more quickly to customer orders. In 2013, Amazon had about
40 warehouses in the United States and another 40 in the rest of the world. It uses the U.S.
Postal Service and other package carriers, such as UPS and FedEx, to send products to
customers. Outbound shipping-related costs at Amazon in 2012 were over $5 billion.
Following the introduction of the Kindle, Amazon has worked hard to increase sales of
digital books. The company has also added a significant amount of audio and video content
for sale in digital form.
Amazon has continued to expand the set of products that it sells online. Besides books and
music, Amazon has added many product categories such as toys, apparel, electronics,
jewelry,
and shoes. In 2009, one of its largest acquisitions was Zappos, a leader in online shoe sales.
This acquisition added a great deal of product variety: According to the Amazon annual
report, this required creating 121,000 product descriptions and uploading more than 2.2
million images to the website. In 2010, another interesting acquisition by Amazon was
diapers.com. Unlike Zappos, this acquisition added little variety but considerable shipping
volumes.

1. Why is Amazon building more warehouses as it grows? How many

warehouses should it have and where should they be located?
Answer: As online based e commerce platforms need warehouses since they have to deliver
products from places to places, so they need warehouses in different locations to make the
transportation cost lower and to store products at ease, also it is clear that when the no. of
warehouses increase the response time decrease and vice versa. The lesser the response time
the better the efficiency hence the customer satisfaction. As of now Amazon has about 185
warehouses, 110 in U.S and rest in Canada, France, Germany, Italy, United Kingdom, China
and Japan.
The current number seems fine so do the locations.

2. Should Amazon stock every product it sells?

Answer: I guess not. This could effect on their inventory cost, they should stock only the
products which have huge demand.

3. What advantages can bricks-and-mortar players derive from setting

up an online channel? How should they use the two channels to gain
maximum advantage?
Answer: The overall performance of traditional bookstore supply chain can be improved
significantly by combining the strength of the retail and online channels. We have to
understand the benefits of collaboration which are most significant for low- demand books.
This kind of books demand is pretty hard to forecast. The book supply chains should be
structured so that retail outlets carry many copies of best sellers for customer purchase and
one copy of low demand books to encourage customers to browse and make impulse
purchase. Advertising for low demand books can be done through proper channels so they
can be sold too.
They should sell the low demand book through online so that the warehouse or the store cost
keeps to the low and the high demand or best seller books can be sold through the retail stores
or traditional book stores. This way they can use the both platforms with much more
efficiency.

4. What advantages and disadvantages does the online channel enjoy in sale
of shoes and diapers relative to a retail store?
Answer:
Advantages:
1. Time to market.
2. Flexible pricing.
3. low facility cost.

Disadvantages:
1. Transportation cost.
2. Response time.
3. IT cost.
5. For what products does the online channel offer the greater advantage relative to retail
stores? What characterizes these products?

Answer: The worst has become a global village now. Even a decade back the e-commerce as
we know e- business weren’t that much popular. This e – business affects customer service
elements such as product variety, availability, customer experience, time to market, visibility,
returnability etc.
A traditional bookstore needs space, human resources, proper collection, management etc.
but an online one like Amazon don’t need such also people now a days don’t have enough
time to go to the library and search for a book for a long time to get the answer of a simple
query. Also, people now a days prefer to use their phones much better than the orthodox ink
and paper. So, yeah that’s why selling books via internet is much more efficient rather than
selling those in a traditional book store.

Disadvantages:
1.Response time
2.Transportation cost
3.Resource cost both human and non-human
Macy’s: Omni-Channel Retailing
After selling for decades from its department stores, Macy’s has made a big push into
omnichannel retailing, allowing customers to have a seamless experience between shopping
online or at a store. Customers can browse online and then experience the product at a store
or order online after seeing a product at the store. Omni-channel is not just about ordering,
however; it is also about fulfillment. Orders placed on any channel have access to Macy’s
entire assortment. By 2012, Macy’s had equipped 292 Macy’s stores to fulfill online orders or
orders from other stores that were sold out of a particular item. If customers desire, orders
placed online can be picked up at select stores and items purchased online can be returned to
stores.

1. Should online orders be filled from stores or fulfillment centers?

Answer: There are both advantages and disadvantages of omnichannel fulfillment centers. I
would only discuss the good and bad side of fulfillment centers. The complete opposites
would be for stores.
Advantages-
 Faster order delivery

 Increased profit margins

 Lower shipping costs

 Fewer returns
Through omnichannel fulfillment centers the company can use multiple strategies at the same
time. Free store pickup option is a very suitable one to keep the delivery very low or none at
all. This way the customers have the opportunity to come to the pick-up area to collect their
products.
There are some disadvantages too of this fulfillment centers, such as-
 Inventory visibility: When you only have one method of fulfillment, it’s easier to
track inventory, but with omnichannel, you’re filling orders from various places.
 Brand unification: This comes as a huge issue as in omnichannel fulfillment centers
the e-commerce companies sometimes can’t provide the real brand experience which
customer wants.
 Dissimilar order types: Omnichannel fulfillment centers allow customers to use
different methods of fulfillment, which leads similarity issues when assemble.

2. How should store inventories be managed in an omni-channel setting?

Answer:
Smarter Warehousing & Stock Management- By using a good omnichannel inventory
management software one can make many changes. For example, you want to alter your
warehouse product lines. The traditional locations or places might have worked for the
retailers in the past but now a days its efficient to use these kind of software where you can
coordinate your warehouse and stock perfectly while campaigning for your products in social
media like facebook, youtube etc.
Clear Data Visibility- This helps to centralize all your inventory data. Through one
platform, you can view and analyze all data on sales, suppliers, and many more.

Don’t Treat Returns as an Afterthought-Improving reverse logistics can boost overall

omnichannel inventory management. Items returning from customers, after all, still form a
part of inventory. Those are still products and by utilizing those properly one can still have
some profits in return.

Always Think About Customer Experience & Satisfaction – Prioritize the customer
experience and satisfaction first. Without it the business may collapse at any moment with a
drastically fall

3. Should returns be kept at a store or sent to a fulfillment center?

Answer: Returns can be kept to the warehouses rather than in place of operation. This way
the store owner doesn’t have to worry much about the processing and the flexibility will also
be ensured. Merchants in this case can issue refunds when necessary, rather than coordinating
with the shipping.