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Group 1

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1.1 Why is Amazon building more warehouses as it grows?

Amazon sells books through the customers orders from internet. Once it got the orders and then it shipped the books to customers from warehouse directly. Since its size get bigger, it need to keep the inventory to meet the customers need in order to fulfill orders quick and effectively. Also, as more warehouses being built, the distance for delivery will decrease so the delivery cost will reduce as well.

1.2 How do you decide the amount of warehouse?

Scale economy When the main purchase power reach a certain extent, we will intuitively build a warehouse to cover the sales in this region. Strategically arrangement Take future development into consideration. Convenient communications With a better communicating location, it could cooperate with the delivery company more efficiently and lower the delivery cost. Renting cost After considering reasons above, the renting cost should come in now. Cost is always one of the reason for choosing the location.

2. What advantages does selling books via the internet provide over a traditional bookstore? Are there any disadvantages to selling via Internet?
1. Reduce physical and administrative cost 2. Fulfill various customers needs Online bookstore is able to provide more categories than traditional store. 3. Build up database system Online bookstore can analyze customers need through their purchase history. 4. Easy to search Its much easier for customer to find out or search their needs online. 5. Develop additional channel for customer to see the products. 6. Chain selling 7. Added value online bookstore can sell more products except books.

2. What advantages does selling books via the internet provide over a traditional bookstore? Are there any disadvantages to selling via Internet?
1. 2. 3. 4. 5. Privacy problem Payment security Gap in perception Inability to feel the physical Cant fulfill real-time requirement

3. Should Amazon stock every book it sells?

We can consider the question by dividing by two categories

Standard inventory Amazon should store physical inventory of the popular books it sells as standard inventory in order to fulfill these customers needs in a certain short time. Just In Time inventory Amazon doesnt have to stock books not in popular demand. When Amazon receives orders which arent in stock, it can cooperate with the publisher to meet the unexpected demand. Furthermore, it can save lots of space to reduce the inventory cost.

4. What advantages can brick-and-mortar players derive from setting up an online channel? How should they use the two channels to gain maximum advantages?
1. Providing another promotion and marketing channel 2. Saving cost on customers survey 3. Increasing consumers 4. Sense of security 5. Direct after-sale service

Maximum advantages:
1. By internet, we can collect more detailed information about customers so that we can make customer database. With that, we can build up the optimal marketing strategy. 2. Providing two channels to customers makes it more convenient and also fit their own needs. At the same time, it could also save unnecessary cost to the company.

5. Should traditional booksellers like Barnes and Noble integrate e-commerce into their current supply chain or manage it as a separate supply chain?


As the figure shows: Upstream supply chain should be integrated, since it doesnt have to do any change to support its new e-commerce. However downstream supply chain cannot be integrated, because of the different frequency of order processing between physical bookstores and individual online customers.

6. For what products does the e-commerce channel offer the greatest advantage? What characterizes these products?
Virtual goods such as software; funds and stocks; tickets; information Physical goods foreign products; the product that buyers and sellers are hard to find each other

The feature or quality of goods can be easily showed from the limited pictures or information on the internet. Its traditional channel can be easily replaced by e-commerce channel - Less cost (e.g. display and stock and rent of stores cost can be eliminated) The searching cost in traditional channel is much higher than e-commerce.