NARSEE MONJEE INSTITUTE OF MANAGEMENT STUDIES

School of Business Management

Course Title Strategic Management

Course Instructor Dr. Neelima Watve

Programme & MBA, Trimester 3, 2023-24

Trimester

Submission Date 24-02-2024

Division A

Group A7

Plagiarism 4%

Aksh Ruia - 80012301103

Ishika Middha - 80012300489

Group Members
Sakshi Pandey - 80012301138

Yash Jhajharia - 80012300061

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Question 1:

Amazon is using both the red ocean and blue ocean strategies when it comes to being in the
market. Here is an analysis of Amazon's red ocean and blue ocean strategies in logistics and
supply:

Red Ocean Features:

• Competing directly with major retailers like Walmart and Target for e-commerce
market share. This is a crowded space.
• Leveraging scale and infrastructure to offer low prices and fast shipping speeds.
Competing on cost and convenience.
• Expanding Amazon Prime membership benefits to provide greater value and lock in
customers. Many other retailers have loyalty programs.
• Focusing on operational efficiency and using technology to optimize fulfilment and
logistics. Other major players are doing this too.
• Acquiring companies like Kiva Systems to improve warehouse automation. Kiva was
not unique technology.
• Overall, Amazon competes intensely on established factors like price, selection, and
delivery speed.

Blue Ocean Features:

• Launching Amazon Marketplace in 2000 to allow third-party sellers. This opened up

selection.
• Creating the Amazon fulfilment and logistics network to enable Marketplace. New
logistics service offering.
• Allowing other retailers/brands to use fulfilment by Amazon. Expanded target market
for logistics platform.
• Developing automated Prime Air delivery drones. A potential disruptive technology
for delivery.
• Acquiring Whole Foods in 2017 to expand into physical grocery, merging online and
offline.
• Launching Amazon Go stores with "Just Walk Out" technology in 2018. Reinventing
the retail experience.

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 • Investing in emerging technologies like AI and automation to create new efficiencies.
Future-focused innovations.
• Overall, Amazon has made some innovative strategic moves that go beyond
established competition.

Amazon competes intensely in core e-commerce but has made selected blue ocean moves
expanding into new markets, services, and technologies. The balance favours red ocean
strategies currently, but Amazon continues to experiment with potential blue ocean
disruptions.

If we compare Amazon's red ocean and blue ocean strategies, we can learn that when it
comes to its core e-commerce marketplace, Amazon employs mostly red ocean strategies
where it competes directly with major established retailers. Amazon focuses intensely on
beating the competition on factors like price, product selection, delivery speed, and
convenience. For example, Amazon offers low prices across its enormous selection of goods,
provides fast and free shipping with Prime membership, and makes online shopping as easy
as possible. These are classic red ocean moves - competing within existing market spaces on
well-known competitive factors. Amazon pours resources into logistics infrastructure,
fulfilment technology, automation, and process improvements to maximize efficiency and
beat rivals on cost and service. The risks here are intense head-to-head battles with the likes
of Walmart and Target.

While Amazon excels at red ocean e-commerce competition, it has also pursued some blue
ocean moves that go beyond its core markets. Prime Air delivery drones have disruptive
potential, and Amazon's acquisition of Whole Foods merged online and offline grocery in a
novel way. Amazon Go's "Just Walk Out" retail concept also reinvented the customer
experience by eliminating checkout lines. By launching its Marketplace platform and
fulfilment services, Amazon greatly expanded its addressable markets beyond retail, creating
new ecosystems and revenue streams. These strategic innovations opened new uncontested
market spaces and tapped into underserved customer needs. However, most of Amazon's blue
ocean endeavours are still works in progress with uncertain outcomes. The risks are investing
in innovations that may fail or take considerable time to develop and scale.

In summary, Amazon currently leans more heavily on red ocean strategies in its core e-
commerce and retail markets where competition is intense. It competes directly on well-
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known factors better than rivals. Blue ocean plays are risky but can unlock significant growth
opportunities if successful. Amazon appears to be employing a balanced red and blue ocean
approach - competing vigorously in established markets while also exploring selected
innovative initiatives with disruptive potential. The mix of strategies allows Amazon to
sustain market leadership while continuing to test and develop promising new business
directions.

Question 2:

Introduction
Most of Amazon's regular e-commerce deliveries through its Prime and Fulfilment by
Amazon services are currently made by third-party carriers, such as USPS, UPS, and FedEx.
To improve control and quality, however, as well as to unlock significant value from faster
delivery to predictive logistics based on its current customer data and AI strengths, the
company should innovate its own delivery capabilities. To achieve maximum differentiation
and growth potential into new demand frontiers, the Blue Ocean Strategy framework points
the way towards uncontested market spaces. Afterwards, by removing and cutting
superfluous components and raising and introducing new steps essential for redefining
industry performance standards, the ERRC methodology that goes along with it assists in
turning strategy into tactics.

Blue Ocean Analysis

In the highly competitive landscape of e-commerce logistics, traditional players and new
entrants alike vie for market share by focusing on incremental improvements in cost, speed,
and reliability of standard ground parcel delivery. However, amidst this crowded space, there
exists a vast untapped opportunity for Amazon to redefine the rules of the game and create
uncontested market space through innovative approaches. By leveraging its extensive data
resources, technological capabilities, and vast customer base, Amazon can transcend the
limitations of traditional logistics paradigms and pioneer disruptive solutions that
fundamentally change the way deliveries are made. Rather than engaging in head-to-head
competition over marginal gains in efficiency or cost savings, Amazon can chart a course
towards new demand frontiers by focusing on delivering personalized, anticipatory logistics
experiences that surpass the expectations of consumers.

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Untapped areas for exploration abound, including the integration of predictive analytics and
AI-driven insights into the delivery process, allowing Amazon to anticipate consumer needs
and preferences before they even arise. By pre-positioning inventory closer to end consumers
and leveraging real-time data on purchasing behavior, Amazon can dramatically reduce
delivery times and enhance the overall customer experience. Furthermore, Amazon can
differentiate itself by pioneering sustainable logistics practices, such as green packaging,
electric vehicle fleets, and carbon-neutral delivery options, aligning with growing consumer
preferences for environmentally responsible businesses.

Moreover, Amazon can capitalize on its vast network of fulfilment centers and distribution
hubs to establish local micro-fulfillment infrastructure, dynamically stocked based on
demand forecasts and consumer insights. This would enable Amazon to offer hyper-localized
delivery options and expand its reach into previously underserved markets, tapping into new
demand segments and further solidifying its position as a market leader. By embracing these
innovative approaches and focusing on creating new value for customers, Amazon can carve
out a blue ocean of opportunity in the logistics industry, where competition becomes
irrelevant, and the company sets the pace for future innovations.

ERRC Framework Application:

Eliminate:
• Reliance solely on major 3PL networks for last-mile delivery with much tighter
control over final transportation.
• Standard 3-5 day guaranteed delivery promises on most products.
• Manual sorting processes in fulfillment centers, transitioning to fully automated
systems for increased efficiency and accuracy.
• Traditional paper-based documentation and processes, shifting towards digital
solutions for improved speed and transparency.
• Inefficiencies in return processes, streamlining and automating returns to enhance
customer experience and reduce operational costs.

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Reduce:
• Contracted 3PLs limited to long-haul or upstream transport only with augmented
roles, optimizing route planning and load consolidation to minimize transportation
costs.
• Per unit delivery cost structures through more owned assets and density optimization,
leveraging economies of scale and route optimization algorithms to reduce costs per
package.
• Redundant or non-essential steps in fulfillment processes, implementing lean
principles to eliminate waste and improve overall efficiency.
• Overhead costs associated with maintaining large fulfillment centers, exploring
smaller, agile fulfillment centers located closer to urban areas to reduce transportation
distances and costs.

Raise:
• Increase last-mile delivery speed guarantees to 90 minutes or less on key products in
supported regions, leveraging real-time tracking, predictive analytics, and dynamic
routing to optimize delivery routes and minimize transit times.
• Significantly amplify prediction and personalization capabilities using consumer
data/AI for preemptive logistics, leveraging machine learning algorithms to anticipate
customer needs and preferences, leading to more accurate inventory management and
demand forecasting.
• Enhance customer service standards by implementing proactive communication and
issue resolution mechanisms, leveraging AI-powered chatbots and virtual assistants to
provide immediate support and assistance to customers throughout the entire purchase
and delivery process.
• Improve delivery accuracy and reliability through the use of advanced tracking
technologies, such as RFID and GPS, to provide real-time visibility into the location
and status of packages throughout the entire delivery journey.

Create:
• Establish local micro-fulfillment infrastructure dynamically stocked using demand
forecasting, leveraging machine learning algorithms to predict consumer demand and

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 optimize inventory levels at micro-fulfillment centers, reducing inventory carrying
costs and improving order fulfillment efficiency.
• Pioneer anticipatory, predictive logistics tailored to individual consumer behavior,
leveraging consumer data and AI-driven predictive analytics to anticipate future
demand and proactively manage inventory levels, leading to reduced stockouts,
improved customer satisfaction, and increased sales.
• Introduce new delivery options and services, such as same-day delivery, curbside
pickup, and in-home delivery, to provide customers with greater flexibility and
convenience, leveraging technology and partnerships with local businesses to expand
delivery capabilities and reach new customer segments.
• Implement sustainability initiatives throughout the supply chain, such as using eco-
friendly packaging materials, optimizing delivery routes to minimize fuel
consumption, and investing in renewable energy sources, to reduce environmental
impact and enhance brand reputation.

Product or Process Development:

Description:
Amazon Predict+ is an end-to-end fulfillment proposition that entirely eliminates standard 3-
5 day guarantees and leverages key data strengths to raise speed, predictive accuracy, and
personalization to unprecedented levels. Regional micro-fulfillment sites house best-selling
items dynamically stocked based on individual user demand forecasts. Sub-90 minute
delivery promises get elevated to the default for these fully owned final mile operations.
Contracted 3PL regional couriers focus on longer distance trunk routes. And AI crunches rich
consumer signals around interests, purchases, and contextual needs to shape hyperlocal
inventory pre-positioning down to the individual shopper when desired.

Key Features:
• Personalized Logistics: Utilizing advanced AI algorithms, Amazon Predict+ offers
personalized logistics solutions tailored to individual customer preferences, including
predictive shipping, customized delivery schedules, and real-time updates.

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 • Sustainable Practices: Amazon Predict+ prioritizes sustainability by optimizing
packaging, utilizing eco-friendly materials, and implementing green delivery options
such as electric vehicles and drone delivery.
• Community Engagement: A dedicated platform within Amazon Predict+ connects
customers with local businesses and service providers, enabling collaboration,
supporting small businesses, and fostering community growth.
• Enhanced Customer Experience: With features like real-time tracking, precise
delivery estimates, and proactive communication, Amazon Predict+ provides an
unparalleled customer experience that raises the bar for service quality in the logistics
industry.

Critical Reasoning and Justification:

Predict+ warrants the considerable investment due to the sizable value in securing ultrafast,
personalized delivery promises. Fulfillment competitiveness increasingly hinges on how
downward last-mile delivery times can be pushed. Owning this final segment allows the
tightest control while best monetizing Amazon's recommendations, targeting, and consumer
habit strengths. Regional facilities keep high-velocity inventory perpetually close at hand
based on AI-informed projections rooted in observed buying behavior. Eliminating asset light
3PL delivery contracts raises capital costs but pays manifold dividends in consumer lifetime
value.

Pursuing fulfillment decentralization caters perfectly to how shopping preferences

differentiate locally while co-locating delivery infrastructure within population hubs sustains
efficiency. As cloud, ML, and streaming capabilities progress, capitalizing early on nascent
anticipatory logistics could provide durable barriers against competitors less equipped on
data/tech fronts. It epitomizes the innovative vision demanded in directing strategy rather
than incrementally reacting, setting Amazon Logistics up for the next era of predictive
commerce.

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Data and Supporting Evidence:

Early testing in densely populated Prime member metro areas offers efficiently contained
launch points before broader rollout. Prime member profiles provide a rich foundation for
training predictive models. Regional facilities can stock ~5,000 high-velocity items covering
80% of demand. Last-mile zones of ~30 minutes can adequately service hub populations of
500K+. $90B in annual shipping expense offers ample revenue to fund reinvestment. These
frictionless reordering experiences, coupled with visibility into existing order status, create a
sense of inventory abundance despite the curated catalog.

Conclusion:

Pursuing this proposition holds exciting potential to redefine standards not through legacy
operational means but via breakthroughs only possible when technology, data, and analytical
techniques intersect with bold vision. Amazon Predict+ puts the company firmly in the
vanguard pioneering anticipatory logistics at scale to usher e-commerce into an era where
shipments fluidly respond to still latent intent. Executed definitively, this represents the
caliber of innovation that reshapes consumer expectations and market forces for years to
come.

This analysis and proposal offer a detailed roadmap for Amazon Logistics to capitalize on
untapped market areas and innovate its logistics operations, setting new standards for
excellence and sustainability in the industry. Through Predict+, Amazon can transform the
fulfillment landscape, differentiate its services, and secure a sustainable competitive
advantage in the evolving e-commerce ecosystem.

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