Amazon Ebusiness Essay

virago was founded in 1994, spurred by what Bezos called regret minimization framework, his effort to fend off regret for non staking a rent in the Internet gold rush. Company lore says Bezos wrote the patronage plan while he and his wife drove from New York to Seattle , although that account appears to be apocryphal. The company began as an online reservestore while the largest brick-and-mortar bookstores and mail-order catalogs for books might lead 200,000 titles, an online bookstore could offer to a greater extent. Bezos named the company virago after the worlds largest river. Since 2000, amazons logotype is an arrow leading from A to Z, representing customer satisfaction (as it forms a smile) a goal was to have all harvest-feast in the alphabet. In 1994, the company integrated in the state of Washington, beginning service in July 1995, and was reincorporated in 1996 inDelaware.The low gear book virago.com interchange was Douglas Hofstadters Fluid Concepts and Creati ve Analogies Computer Models of the Fundamental Mechanisms of Thought. virago.com issued its sign public fling of stock on May 15, 1997, trading under theNASDAQ stock exchange type AMZN, at an IPO impairment of US$18.00 per share ($1.50 after three stock splits in the late 1990s). viragos initial business plan was unusual the company did not expect a bread for four to five years.Its slack up growth provoked stockholder complaints that the company was not arrive at profitability fast enough. When the dot-com ruffle burst, and many e-companies went give away of business, amazon persevered, and finally turned its offset profit in the quartern quarter of 2001 $5 trillion or 1 per share, on revenues of more than $1 billion, solely the humiliated profit was all- historic(prenominal) in demonstrating the business model could be profitable. In 1999, Time magazine named Bezos soulfulness of the Year,recognizing the companys success in popularizing online shopping. virago.com point of intersections and servicesvirago product lines include books, harmony CDs, videotapes and DVDs, software, consumer electronics, kitchen circumstances, tools, lawn and garden items, toys & games, baby products, apparel, sporting healthys, gourmet food, jewelry, watches, health and personal-care items, beauty products, musical instruments, c canhing, industrial & scientific supplies, and groceries. The company launched amazon.com Auctions, a weathervane auctions service, in bump into 1999. However, it failed to chip away at pains pi sensati mavinr eBays large commercialise share. virago.com Auctions was followed by the launch of a fixed-price marketplace business, zShops, in phratry 1999, and the now defunct Sothebys/Amazon partnership called sothebys.amazon.com in November. Auctions and zShops evolved into Amazon Marketplace, a service launched in 2001 that let customers tell on drug ab utilise books, CDs, DVDs, and other products alongside revolutionary items. T oday, Amazon Marketplaces of import rival is eBays Half.com service. In August 2005, Amazon began selling products under its ingest private label, Pinzon the tag applications indicated that the label would be used for textual matteriles, kitchen utensils, and other household goods.In March 2007, the company applied to expand the stylemark to c all over a more diverse constitute of goods, and to register a new design consisting of the intelligence information PINZON in stylized letters with a notched letter O whose space appears at the cardinal oclock position..Coverage by the trademark grew to include items such as paints, carpets, wallpaper, hair feelerories, clothing, footwear, headgear, cleanup spot products, and jewelry.On September 2008, Amazon filed to have the name registered. USPTO has finished its review of the application, but Amazon has yet to ask for an official registration for the name. Amazon MP3, its own online music store, launched in the US in September 25, 2007, selling downloads sole(a)ly in MP3 format with by digital rights steering.This was the first online offering of DRM- excess music from all four study record companies. In August 2007, Amazon announced AmazonFresh, a grocery service offering putrescible and nonperishable foods. Customers can have orders delivered to their homes at dawn or during a specified daytime window.Delivery was ab initio restricted to residents of Mercer Island, Washington, and was later expanded to severalZIP codes in Seattle proper. AmazonFresh also operated pick-up locations in the suburbs of Bellevue and Kirkland from summer 2007 finished with(predicate) early 2008. In 2008 Amazon expanded into film production, producing the film The Stolen Child with 20th Century Fox. Amazon.com has incorporated a number of products and services through development and acquisitions. The Honor System was launched in 2001 to allow customers to stir donations or buy digital content, with Amazon collecting a percentage of the payment plus a fee. The service was discontinued in 2008. and replaced by Amazon Payments. Amazon launched Amazon Web Services(AWS) in 2002, which yields programmatic access to latent features on its website. Amazon also raised bank lines to benefit certain causes. In 2004, Amazons Presidential Candidates allowed customers to donate $5200 to the campaigns of 2004 U.S. presidential hopefuls. Amazon has percentage pointically reactivated a Red dun donation tune after crises such as the 9/11, Hurricane Katrina, and the 2004 earthquake and tsunami in the Indian Ocean.By January 2005, nearly 200,000 people had donated over $15.7 million in the US. Amazon Prime offers two day transportation with no minimum purchase amount for a flat annual fee, as well as discounted priority shipping rates. Amazon launched the program in the continental coupled States in 2005, in Japan, the United Kingdom and Germany in 2007, and in France (as Amazon Premium) in 2008. Launched in 2005, Amazon Shorts offers exclusive short stories and non-fiction pieces from best-selling authors for immediate download. By June 2007, the program had over 1,700 pieces and was adding ab egress 50 new pieces per week. In November 2005, Amazon.com began testing Amazon Mechanical Turk, an application computer programming interface (API) allowing programs to dispatch tasks to human processors. In March 2006, Amazon launched an online storage service called Amazon Simple Storage Service (Amazon S3).An unlimited number of selective information objects, from 1 byte to 5 gigabytes in size, can be stored in S3 and distributed via HTTP or BitTorrent. The service charges monthly fees for data stored and transferred. In 2006, Amazon introducedAmazon Simple Queue Service (Amazon SQS), a distributed queue messaging service, and product wikis (later folded into Amapedia) and backchat forums for certain products using guidelines that follow standard message board conventions. Also in 200 6, Amazon introduced Amazon E wearic Compute Cloud (Amazon EC2), a virtual site farm, allowing exploiters to use the Amazon infrastructure to suffer applications rangingfrom running simulations to web hosting. In 2008, Amazon improved the service adding Elastic Block Store (EBS), offering persistent storage for Amazon EC2 instances and Elastic IP addresses, static IP addresses designed for dynamic tarnish computing. In 2007 Amazon launched Amapedia, a wiki for user-generated content to replace ProductWiki, the video on demand service Amazon Unbox, and Amazon MP3, which sells downloadable MP3s.Amazons terms of use agreements restrict use of the MP3s, but Amazon does not use DRM to enforce those terms. Amazon MP3 sells music from the Big 4 record labels EMI, Universal, Warner Bros. Records, and Sony BMG, as well as independents. Previous to the launch of this service, Amazon do an investment in Amie Street, a music store with a variable pricing model based on demand. Also in 2007 Amazon launched Amazon Vine, which allows reviewers free access to pre-release products from vendors in return for posting a review, as well as payment service specifically tar fixed at developers, Amazon FPS. In November 2007, Amazon launched Amazon Kindle, an e-book reader which downloads content over Whispernet, via the hyphen Nextel EV-DO wireless network. The screen uses E Ink engine room to down battery consumption. In 2008 Amazon tell that its Kindle-based library included 200,000 titles.In December 2007, Amazon introduced SimpleDB, a database system, allowing users of its other infrastructure to utilize a high reliability high executeance database system. In August 2007, Amazon launched an invitation-only beta-test for online grocery delivery. It has since rolled out in several Seattle, Washington suburbs. In January 2008 Amazon began rolling out their MP3 service to subsidiary websites world immense. In December, 2008, Amazon MP3 was do available in the UK. In Septemb er, IMDB and Amazon.com launched a Music metadata browsing site with wiki-like user contribution.In November, Amazon partnered with Fisher-Price, Mattel, microsoft and Transcend to offer products with minimal packaging to thin environmental impact and frustration with rise clamshell type packaging. Amazon Web Services launched a public beta of Amazon Elastic Compute Cloud running Microsoft Windows Server and Microsoft SQL Server. Amazon Connectenables authors to post remarks on their book pages to customers. WebStore allows businesses to create custom e-commerce websites using Amazon technology. Sellers pay a focussing of 7 percent, including credit-card processing fees and fraud protection, and a subscription fee of$59.95/month for an unlimited number of webstores and disputationings. Why Amazon.com is booming as a business on internet and has excellent capabilities supported by information system and e-commerce?Amazons initial business plan was unusual the company did not exp ect a profit for four to five years. Its slow growth provoked stockholder complaints that the company was not reaching profitability fast enough. When the dot-com bubble burst and many e-companies went out of business, Amazon persevered, and finally turned its first profit in the fourth quarter of 2001 $5 million or 1 per share, on revenues of more than $1 billion, but the modest profit was important in demonstrating the business model could be profitable. In 1999, Time magazine named Bezos Person of the Year, recognizing the companys success in popularizing online shopping. Amazon changed the way it does business through the years. First it was an online book seller. Next it expanded into selling music and videos. Then it offered toys, consumer electronics and software to its customers. These were associationed with a host of new products until this very day.Amazon has a constantly evolving product line. Its competitors have a hard time contractable up with the innovator. During its initial years of operation, Amazon was not making any real profit. It practiced kind of the habit of reinvesting its income into new markets. This it did to make possible for its customers to make wider choices for the companys offerings. Inventory guidance is an important function for any business and its efficient implementation can play a study social function in reducing costs within a company. Policies, procedures, and techniques employed in maintaining the optimum number or amount of each scrutinise item. The objective of inventory management is to provide uninterrupted production, gross revenue, and/or customer-service levels at the minimum cost, Levi D. S. et al (2003). Levi explains that a high-quality inventory management system provides a smooth and efficient communicate grasp by reducing costs and time. Initially when a company is established, key individuals may perform such tasks as purchasing, manufacturing or inventory control with little problem in terms of lapping functions.But as a company expands it may be necessary to concentrate on marrow functions in the aim to have specialized personnel in all(prenominal) department. Each function has an important part to play in the supply chain. The correct management ofinventory enables a company to reduce liabilities and cost of overstocking, to streamline operations and to have better utilized staff. Amazon.com, the worlds largest online retailer and one of the nations biggest book sellers, is one of the iconic companies of the Internet era, Eells S. (2010), and by realizing the importance of inventory management can only improve its supply chain. From the text we can see that when CEO Jeffrey P. Bezos went about place up Amazon.com, he had a clear aim to offer customers a wide selection of books but at the same time did not want to spend time and money on opening stores and warehouses and in dealing with the inventory.Bezos was hesitant in deciding to maintain Amazons own warehouse but tell apart that this was the only way for the company to keep customers satisfied. Internet shopping was rapidly expanding and with Amazon now stretch its ranges from not only books but to CDs, toys and hardware, they too were a growing industry. Amazon began setting up warehouses throughout the US, strategically placing them in states with little or no sales agreements tax in order to reduce costs. These warehouses were very well maintained and completely computerized, with each item having a separate code which made inventory management a lot easier. Within the large warehouses, Amazon held all products which were available on the website. This was not always a good idea as it cost Amazon money in order to stock these goods. In the holiday temper of 1999, Bezos was determined not to disappoint any customers then he ordered larger amounts of every product. With this large amount of inventory, Bezos found it very hard to manage, so aimed to rearrange the warehouses to acco mmodate the demand in different contributions.They then decided to outsource some of its routines activities so that they could concentrate more on their core competencies. Deciding whether to outsource or not was a difficult decision for Amazon but seen in the Strategic outsourcing book by Greaver M. (1999), he explains that there relieve a number of reasons how outsourcing can be a major advantage. These points are broken into 6 headings 1. organisational reasons Enhance effectiveness and focus on what you do best and also makes the company more tractile 2. Improvement compulsive reasons Improve operating performance and also management and control 3. Finally driven reasons Reduce investment assets and free up these resources for other areas of the business 4. Revenue driven reasons Gain market access andbusiness opportunities along with accelerating expansion 5. Cost driven reasons Reduce cost through superordinate word provider performance and lower cost structure 6. Em ployee driven reasons Increase commitment and energy in non core areas. Amazon decided to outsource its inventory management, and with this they decided not to stock every item offered on its site.It stocked only the most popular and frequently purchased items and as for the other items, they were requested from the allocator on ordering. The item would be sent to Amazon, unpacked and finally sent to the customer. Amazon entered into an agreement with Ingram Micro Inc. to use its knowledge and experience in the electronic goods and supply chain management in order to provide logistics and order-fulfillment services for desktops, laptops and other computer related accessories. From the event, Kevin Murai, President, Ingram Macro U.S. informs everyone the advantages in which they can offer to Amazons supply chain and satisfaction of customers, The customer fulfillment services we are providing to Amazon.coms computer store will asperse the number of touches to the product, while en suring a seamless shopping experience for Amazons customers from start to finish. A cooperative approach was obvious from this.A collaborative partnership has become an alternative approach to care, replacing handed-down hierarchical approach as the desired approach to care. The features of collaborative partnerships are (1) Power sacramental manduction and sharing of expertise (2) the pursuit of mutually agreed on, person centered goals and, (3) a dynamic process that requires the progressive participation and agreement of all partners in the relationship, Elsevier M. (2006). Both Amazon and Ingram Micro both shared the love for customer satisfaction which was the main driving force to the success of their partnership. Amazon has identified its core competencies as customer convenience and accessibility, massive selection, personalized service, quality of the site content, quality of its search tools and price, Mulqueen K. (2009). By go into into this partnership it gives Amaz on more quality time to put into its core competencies. During the initial stages of Amazons warehousing, it aimed to have every item in stock in order to maximize customer satisfaction. By having this inventory, it would enable Amazon to meet the needs of the customers when they purchased the goods online.When the customer chooses the item, Amazon takes it from inventory and sent it to the respectivecustomer. We can see the logical system in which Bezos takes as he is aiming to satisfy every customer in order to build a positive jut out and reputation of the company. Holding this much inventory on the other can be quite costly and also for a small business which Amazon was when taking on this rule can be very difficult to manage. Amazons warehouses were a quarter mile long and 200 yards wide storing millions of books. Each warehouse cost Bezos around 50 million and not only this he started to realize that having all these large amounts of stock was unutilized cash which could be used to improve the business elsewhere. The below image (fig 1.1) gives you an idea of the scale of the warehouses and how an effective inventory management structure is vital. Learning from the difficult holiday season of 1999, Bezos outsourced some of their core competencies in order to pay more attention to other areas of the business. In our intuitive feeling this was a step in the right direction as when Amazons partners shipped the goods Amazon regenerateed the layout of their warehouses which makes the items easier to find and allowed customer orders to be sorted more efficiently.In early 2001, when Amazon partnered with Ingram Micro Inc., we feel that this was the correct decision for Amazon in the aim for efficient inventory management and it didnt take long for changes to be made to the stocking of inventory. Amazon decided to stock only the most popular and most frequently purchased. If an item which wasnt in stock, Amazon simply ordered in from the distributor and who then shipped it to Amazon where they would unpack it and lance it to the customer. This may seem like a longer process but we feel this step which significantly reduce costs and better utilized Amazons finances. This is evident from the case as in December 00 their glaring profit was 656.8 million where it was more or less doubled in December 02 where the profit was 1,074.9 million. By doing this method, inevitably Amazon trim down holding costs. This method was proving to be a positive for Amazon as the improved inventory management helped Amazon record its first ever profit in 2001.From being initially in a deficit of $2.86 billion seven years earlier, Amazon recorded a net profit of $5 million in the fourth quarter of 2001. By Amazon outsourcing its inventory management, we could see the improvements almost immediately from their financial reports in the case. It is clear in our opinion, that Amazon made the right decision when outsourcing this function. It has reduced cost by keeping fewer inventoriesand at the same time has partnered with a company with a great deal of expertise in the technology functions which can again be a major positive for the company. This shows again that outsourcing the inventory function was the correct decision for Amazon. The transfer of Amazons inventory management as shown in the case was a positive influence on the company and we feel that it was a successful task.The reason for this is simple Amazon has tried and tested various inventory techniques from when it was first established. At first Amazons inventory was too great and was seen to be unutilized cash. Bezos realized that this unutilized cash could possible to used to benefit over departments within the company. The task of outsourcing this area made a profit for the company immediately, at the end of 2001, Amazon had a sales record of 1.1 billion which was a 15% increase on the same period of the previous year. Then again in 2002, we can see from the case that Amazon recorded sales of 3.93 billion which was a 26% increase on the year previous. These figures show that the task of outsourcing inventory for Amazon was an important function which has shown to get record sales for the company and along with the expertise given by Ingram Micro was overall a positive influence on the company. Overall, Amazons decision to outsource its inventory management and concentrate more on other functions within the business was the correct decision in our opinion.This is proven by the increase in profit since doing so. Amazon managed to outsource this function and still satisfy their customers which is one of their core values along with being innovative. gibe to businessweek.com, Amazon in 2010 had a net income of $231 million in comparison to $177million in 2009 which again is an indication that the companys decisions have only had a positive impact as the company continues to grow. This is a positive for the company but in comparison to its main com petitor, EBay had a net income of 397.65 million in 2010 which is also seen on businessweek.com. This shows that there is a lot of work done but still in order to compete with its competitors it must still strive to improve. Amazon prides itself on a strong stain, excellent customer service and a well designed, behind to use website. Its use of E-Business strategies enables the company to cut costs better than its competitors and empower its customers by offering them choice.It could be argued that Amazons most valuable asset is its CEO and Founder Jeff Bezos. Bezos innovative style has grown the company from talent to strength and latest figures, according to the website www.siliconrepublic.com show an increase in profit of 36% to $12.95bn for 2010 from a decline to 3.7pc from 5pc at the end of 2009. In 2001, Amazons CEO, Jeff Bezos welcomed competitors rather than fighting them. This decision was initially seen as somewhat controversial. According to Vogelstein (2003) the deci sion caused such a stir in the book-publishing community that the Authors Guild formally stepped in. They wanted used books sold on a different page from newly published ones. Amazon was able to do this as a result of its efficient inventory management. Vogelstein (2003) states that Amazons warehouses are so efficient that they need to be replenished 20 times per year and they can now handle three times the volume they handled in 1999.The net result of this initiative is increased profits as can be seen from the case. The success of Amazon can be attributed to E-Business. Tedeschi (1999) state Business on the Internet is cutting significant cost out of the supply chain, with better procurement and resource planning. With Amazon, these cost savings are passed onto the end customer. Through price comparison and transparency on its webpage, customers could make informed decisions based on price. This created massive popularity with its customers.E-Business also creates brand strength. According to Matthewson (2002) a recent survey demonstrated the importance of online brand building, as it showed that six out of ten internet users instantly typed into their browser the address of the brand they are interested in buying. The website is verbalize to attract 81 million unique visitors each month .Amazon has capitalized on this process known as cyber-branding. This essentially promotes the company through superior customer service. Its logistics in both inventory efficiency and technology gives it a superior edge over its competitors. Its operations are very efficient due to the strategic locations of its warehouses and headquarters, which have enabled Amazon to cut a lot of its costs.The market in which amazon.com operates and how it is organized by region and countryAmazon.com has always sold goods out of its own warehouses. It started as a bookseller, pure and simple, and over the last decade has branched out into extensional product areas and the third-party sa les that now represent a good chunk of its revenue (some estimates put it at 25 percent). Both retailers and individual sellers utilize the Amazon.com platform to sell goods. Large retailers like Nordstrom, Lands End and Target use Amazon.com to sell their products in addition to selling them through their own Web sites. The sales go through Amazon.com and end up at Nordstrom.com, Lands End.com or Target.com for processing and order fulfillment. Amazon essentially leases space to these retailers, who use Amazon.com as a supplemental outlet for their online sales. Small sellers of used and new goods go to Amazon Marketplace, Amazon zShops or Amazon Auctions. At Marketplace, sellers offer goods at a fixed price, and at Auctions they sell their stuff to the highest bidder. Amazon zShops features only used goods at fixed prices.If an item listed on zShops, Marketplace or Auctions is also sold on the main Amazon.com, it appears in a box beside the Amazon.com item so buyers can see if so ul else is selling the product for less in one of the other sales channels. The level of integration that occurs on Amazon is a programming feat that few (if any) online sales sites can match. Another sales channel called Amazon Advantage is a place where people can sell new books, music and movies at one time from the Amazon warehouse instead of from their home or store. Sellers ship a number of units to Amazon, and Amazon handles the stallion sales transaction from start to finish. In all of these programs, Amazon gets a cut of each sale (usually about 10 percent to 15 percent) and sometimes charges additional listing or subscription fees in the case of Amazon Advantage, the company takes a 55 percent commission on each sale. The Advantage channel is something like a consignment setup, a sales avenue for people who create their own music CDs or have self-published a book and are simply looking for a way to get it out there.One of the latest additions to Amazons repertoire is a s ubsidiary company called Amazon Services. Through Amazon Services, Amazon sells its sales platform, providing complete Amazon e-commerce packages to companies looking to establish or revamp their e-commerce business. Amazon sets up complete Web sites and technology backbones for other e-commerce companies using Amazon software and technology. Target, for instance, in addition to having a store on Amazon.com, also uses Amazon Services to build and manage its own e-commerce site, Target.com. But selling goods isnt the only way to makemoney with Amazon.com. The Web sites affiliate program is one of the most famous on the Web. Through Amazons plug into Program, anyone with a Web site can post a link to Amazon.com and earn some money. The link can display a single product chosen by the associate, or it can list several best seller products in a particular genre, in which case Amazon updates the list automatically at preset intervals.The associate gets a cut of any sale made directly thr ough that link. The cut ranges from 4 percent to 7.5 percent depending on which fee structure the associate signs up for (see Amazon Associates for complete program details). The associate can also take advantage of Amazon Web Services, which is the program that lets people use Amazons utilities for their own purposes. 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