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Amazon: Online Sales: Disadvantages

Amazon is building more warehouses to reduce response times for customer orders and aims to deliver most items the day they are ordered. It currently has around 50 warehouses, with 20 in the US and others in several other countries. Selling books online provides advantages over traditional bookstores like much larger selection and lower costs, but has disadvantages like longer response times and transportation costs. It would not be practical for Amazon to stock every book it sells due to the enormous warehouse space and inventory costs required. Instead, it uses different inventory models depending on a book's popularity. Bricks-and-mortar retailers can benefit from setting up online channels to aggregate sales of low demand books and keep bestsellers in physical stores. The online channel is particularly

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Hitisha agrawal
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387 views

Amazon: Online Sales: Disadvantages

Amazon is building more warehouses to reduce response times for customer orders and aims to deliver most items the day they are ordered. It currently has around 50 warehouses, with 20 in the US and others in several other countries. Selling books online provides advantages over traditional bookstores like much larger selection and lower costs, but has disadvantages like longer response times and transportation costs. It would not be practical for Amazon to stock every book it sells due to the enormous warehouse space and inventory costs required. Instead, it uses different inventory models depending on a book's popularity. Bricks-and-mortar retailers can benefit from setting up online channels to aggregate sales of low demand books and keep bestsellers in physical stores. The online channel is particularly

Uploaded by

Hitisha agrawal
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Amazon: Online Sales

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


How many warehouses should it have and where should they
be located?
Ans: Amazon is grewing the company adding warehouses allowing it to
react more quickly to customer orders. Increasing the number of
warehouses near customers will reduce the response time. Amazon aims
to be able to deliver most items the day they’re ordered, so it can keep
rivals such as EBay and Wal-Mart Stores from peeling off customers.
Amazon has around 50 warehouses, 20 in US and rest in Canada, France,
Germany, Italy, UK, China, Japan.
2. what advantages does selling books via the internet
provide over a traditional bookstore? Are there any
disadvantages to selling via internet?

Ans: Now a days world has become global village that’s why there is a
need to start business via e-commerce as we know e- business affects
customer service elements such as product variety, availability, customer
experience, time to market, visibility, and return- ability. Amazon offers a
much larger selection of books than a typical bookstore. Offering the same
selection at a retail store would require a huge location with
correspondingly large amount of inventory.

Disadvantages:
• Response time
• Transportation cost

3.Should amazon stock every book it sells?

Ans: No, If Amazon stocked every book it sells, it would need a warehouse
the size of Nevada. It would also have gigantic inventory costs.Amazon
uses three basic methods for selling books.
◦ standard inventory
◦ "just in time" inventory
◦ third party sellers
Physical inventory of the most popular books it sells.Less popular books
are subject to "just in time" inventory management. Amazon doesn't have
the books, but has arrangements with thepublishers to ship the books as
soon as it receives orders. Results in a slight delay in shipping to the
customer, but Amazon saves a lot of money in inventory costs.Has network
of third party merchants who sell through Amazon. These third party
merchants generally specialize in out-of-print books or
books that deal with relatively arcane subjects. Those books are
shipped to the customer directly from the third party and are billed by
the third party to the customer's credit card or paypal account. Amazon
takes a small commission for acting as a middleman.Stock only those
product with high demand.

4. what advantages can bricks-and-mortar players derive


fromsetting up an online channel? How should they use the
two channels to gain maximum advantage?
Ans: The performance of traditional bookstore supply chain can be
improved significantly by combining the strength of the retail and online
channels. It is important to realize that the benefits of aggregation are most
significant for low- demand books whose demand is 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. Terminals or internet kiosks should be provided so that
customers wanting to order low demand books that the bookstore can
offer.This approach allows the supply chain to reduce inventories by
aggregating low demand books sold online while keeping transportation
costs low for best sellers sold at retail store.
5. what advantages/ disadvantages does the online channel
enjoy in sale of shoes/ diapers relative to a retail store?

Advantages:
1. Time to market
2. Flexible pricing, portfolio, promotions
3. low facility cost

Disadvantages:
1. Transportation cost
2. Response time
3. IT cost

6. For what products does the online channel offer the


greater advantage relative to retail stores? What
characterizes these products?

Online channel offer the greater advantage for those products having large
product varieties.
For example; Netflix offers a much large selection of movies than any
video rental store, offering the same selection at a store would require a
huge location with correspondingly large amount of inventory.

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