Amazon – College Essay
Amazon.com, headquartered in Seattle, Washington, the world’s largest online retailer and also one of the nation’s biggest book sellers. It was founded in 1994 by Jeffrey P. Bezos, a former financial analyst for the New York hedge fund D.E. Shaw & Company. In the beginning, the company began as an online bookseller in 1995. The name Amazon.com was chosen because the Amazon River is the largest rivers in the world. The Company operates in two segments, North America and International. Amazon has established separate websites all over the world, such as Canada, the United Kingdom, Germany, France, Italy, Austria, Japan, and China.
It also provides international shipping to certain countries for some of its products. EBay, Overstock, Barnes and Noble, Google, and Wal-mart stores are all major companies that offer competitive services to customers worldwide. These companies belong to the retail industry and are categorized into the services sector. While each of these has their own unique features and capabilities, Amazon is no exception. Amazon, a customer-centric company with a market capital of nearly one hundred billion it lies at the top with its competitors and has skilled internal operations that some lack. It is originally as an online bookseller and slowly climbed its way to becoming a multibillion dollar company. Its climb to the top was not an accident or a result of good market timing, although this did help, it was its internal operations that played a major role.
“Unlike such online rivals as, say, Barnes and nobles (bn.com) or walmart.com, Amazon has no roof over its head—no bricks-and-mortar presence to anchor its online presence” that being said, Amazon had to compensate for this difference. Amazon as wells as its investors discovered that its profits were depleted by soaring costs and expenses. When their primary sales of books were not promising a future, the company shifted to product offerings such as toys, music, electronics, software, and household goods. This diversification broadened the customer base and created a stepping stone to eventually form its next operations development; IT and infrastructure advancements. Logistics also had to be fine tuned which led to the items being “drop-shipped” to eliminate the middle man and link the customer straight to the manufacture.
This cut inventory and warehousing costs significantly and also speeded delivery times. Warehousing processes were automated from conveyer belts to the organization of packaging to increase productivity. To reduce the shipping costs, Amazon had tried to pack all the items together into one package and ship to single address. The important operation part that Amazon focuses on is the “software”. It designs the effective systems to reduce the labor costs, increase accuracy and speed, improve customer experience. As for the website and its ease of use, Amazon has created many technologies such as, the “one click” option which allows users to make a purchase in just one click mouse click. The website also designed “user product reviews”, “wish lists”, favorite lists, etc. to provide a convenience to the customers.
Amazon then developed what is called “Amazon web services” this service allows independent programmers and merchants to access these web services and customize it to their own use and needs. Charging a 15% commission if these mentioned sell through Amazon, this feature resulted in 22% of Amazon sales by outside merchants. Amazon then created Amazon simpleDB which is used by Target and Office Depot that easily allowed users to quickly obtain simple data and website management. In November 2007, the company created the Kindle device, an electronic book reader with the capability of downloading books wirelessly.
By the end of 2008, the devices had more than 275,000 titles available, 1,500 books, and the ability to download newspapers, magazines and blogs as soon as its release without using computers. It also can search through Google, follow links from web-pages, write down notes on the page you are reading, and capture selected passages as an electronic highlighter. In February 2009, Amazon developed the Kindle 2 and Kindle DX with a larger screen and upgraded features. The sales after 8 months are close to $100,000 million, with expected sales of $1.2 billion to $1.4 billion by 2010, which values about 4 percent of the company’s yearly revenue.
1. What types of decisions common to manufacturing firms does Amazon make? What types of decisions common to service firms? How do both types of decisions relate to the marketing of Kindle? The programmed decision is common to manufacturing firms and service firms. For the manufacturing firms and the service firms, the company has been trying to use and develop the effective operations to make it simply, raise accuracy and meet the customer’s demand. It’s related to the marketing of the Kindle because they have been improving from the first start and keeps continueing the good performance until present.
2. Describe Amazon’s entire supply chain. From which activities in this supply chain does Amazon make money? At what points in the supply chain does Amazon outsource or contract activities to outsiders? Amazon’s supply chain is structured in different ways. It utilizes “drop shipping” starting when the consumer orders a product via Amazon but is shipped directly from the manufacture. Another type is when it ships from its own inventory or another manufacturer’s. Amazons money maker comes from drop shipping. They perform as the middle man, never even have to “touch” the product that is being transacted. Amazon outsources in the case of supply and demand, they will outsource sales to other companies to fulfill the order of their customers.
3. Go online to Amazon.com and select an item that comes from Amazon itself rather than from a drop shipper. What kind of purchasing decisions were necessary to make this product available at Amazon’s price? What kind of inventory control decisions? I chose to purchase the Kindle. The purchasing decisions were dictated by the manufacture itself resulting in a direct manufacture to consumer buy. Inventory control was fulfilled by the manufacture itself supplying the demand and managing its backlog.
4. What facets of Amazon’s operations allow it to offer a high-quality shopping experience to customers? In all honesty, it is the ability to supply the demand regardless of whoever that supplier may be provided it meets Amazons credited guidelines.
5. Give three or four examples of ways in which Amazon’s operation contribute to high productivity. Firstly, the web sites product searching tool provides many results with the most competitive price. Secondly, that its non-brick and mortar business technically uses the manufactures very own warehouses to hold the inventory that eventually Amazon will sell. Lastly, that it is web based and requires no stop signs, red lights, or gas station refills to get to the check out.
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