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Amazon Dot Com Case Study Questions 1

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Manoj Ram
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40 views

Amazon Dot Com Case Study Questions 1

Uploaded by

Manoj Ram
Copyright
© © All Rights Reserved
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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AMAZON.

COM
SUPPLY CHAIN
MANAGEMENT
CASE STUDY PART 1
TEAMS

• Breakouts during class


• Turn in assignment independently
LEARNING OBJECTIVES
• Assess Amazon’s supply chain and identify its key competitive advantages.
• Quantify Amazon’s ability to generate value from its supply chain.
• Identify potential opportunities and challenges for Amazon in improving its
supply chain.
• Analyze the effects of the opportunities and challenges Amazon faces in its
growth and evolution.
ASSIGNMENT QUESTIONS

1. Review Amazon’s supply chain. How is Amazon’s supply chain different from
that of traditional brick-and-mortar retailers? Use exhibit 1 - 3 in tips (part 1)
2. What are the key advantages to the structure of Amazon’s supply chain and
the company’s management of its supply chain operations? Support your
analysis with data from the case. (Part 2)
3. What are the challenges Amazon faces, and what are the implications for its
supply chain? (Part 3)
4. As Jeff Bezos, what steps would you take to improve Amazon’s supply chain?
Why? (part 3)
ASSIGNMENT QUESTION FOR PART 1 ONLY

1. Review Amazon’s supply chain. How is Amazon’s supply chain


different from that of traditional brick-and-mortar retailers? Use
exhibit 1 - 3 in tips (part 1)
ADDITIONAL QUESTIONS TO SUPPORT
ASSIGNMENT – USE TO SUPPORT PARTS 1 - 3
1. Is Amazon a retailer, a logistics company, or a technology company?
2. Why does Amazon allow third-party sellers to distribute products through its site?
3. How profitable is the Amazon.com operation?
4. What are the advantages and disadvantages of Amazon Prime?
5. Can Amazon continue its dominance in e-commerce? What are the major threats to its
business model?
6. What services can brick-and-mortar retailers provide customers that Amazon cannot
provide?
7. What challenges does Amazon have with respect to handing customer returns?
8. Would you invest in Amazon stock? Why or why not?
WHAT IS AMAZON’S STRATEGY?

• Retailer
• Logistics company
• Technology company
• The case data indicates
• Global retail sales growth of 50% from 2017-2020
• E-commerce sales were ~8.8% total retail sales in 2017
• $450B of $5.1Trillion
• Exhibit 2 in the case study
• $106B in domestic e-commerce sales
• Amazon has 23.5% of US E-commerce market share and ~2% of total US retail sales
• If Amazon maintains market share US sales will grow $150B by 2022.
• Walmart $500B revenues ($375B in US 75% of domestic sales in 2018), has 6.6% US retail
sales. Walmart.com has $11.5B in e-commerce revenues or about 10% of Amazon’s US sales
• Amazon had 43% (of segments served) of the US e-commerce market and 4% of retail sales (pg 9)
• Amazon does not compete in all the sectors (automotive dealerships/restaurants)
• Market confidence
• Whole Foods was free.
• When it was announced, Amazon’s market capitalization rose by more than the
price it paid for the company
• Traditional Brick and Mortar vs Amazon
• Different delivery channels as expressed in the flow chart in Tips Exhibit 2
• Amazon’s value proposition was to offer, at competitive prices, the broadest
variety of products, which could be ordered conveniently and shipped/received
within a short window.
• No limit to the number of products, no stores to oversee, no retail employees
• 2 key things to manage: supply chain operations, capacity, and inbound/outbound
logistics were efficient.
Exhibit 1: Board Plan
Retail Strategy MIS Supply Distribution
Value proposition: broadest possible assortment
of products, at competitive prices, shipped and Category buyers for limited number of Amazon More than 1.2B customer shipments; more
received in a short time window Vendor Central MOR products than 5B items shipped
Investments in
automation; Amazon Amazon products sourced through first and Exhibit 7: 708 facilities including fulfillment
300 Million customers Robotics second party sellers centers, Prime Now hubs, delivery stations
More than 2 MM third party sellers listed
products on Amazon.com;required approval for Fulfillment centers focused by product
573 million products for sale some products category or size
Prime memberships: $119 x 100MM members =
$12B Third-party sellers represent 50% units shipped Inound and outbound sortation centers
Third-party sellers handled sourcing and owned
Delivery to home or car the inventory - Amazon was paid a fee Amazon Flex for last mile delivery
Fulfillment by Amazon (FBA) service source of
Amazon Key revenue Building truck and Prime Air fleets
Physical stores sales $1.3B: Whole foods (465);
book stores (12), Amazon Go Discontent among Whole Foods suppliers Freight forwarding operation in China
Shipping revenues of $9B vs costs of $16.2B
Purchases bulk shipping services
Product flaws
How are these tied together?
Where are the interrelationships?
Underpinnings:
Culture: High tech
Performance: Future: Alternatives?
How profitable is Amazon.com? Sustainable?
Exhibit 2: Amazon Delivery Channels

Amazon suppliers ship product to inbound sortation centres. Product is


shipped to a fulfillment centre.

Amazon suppliers ship


product directly to

Product is picked, packed, and loaded onto a trailer at the fulfillment


centre.

Product is sent to Package is sent to a sortation centre, where


FedEx or UPS it is combined with product going to a
similar Zip code

Packages are sent Packages are sent


to the US Postal to Amazon Delivery
service stations and hubs

Packages are Packages are Packages are


delivered by delivered by delivery by local
FedEx or UPS postal carrier courier or Flex
Exhibit 3: Supply Chains of Amazon and Traditional Retailers

Amazon Traditional Retailer


Strategy

Sales

Supply/Procurement

Supply Chain

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