Essay Amazon.Com’s European Distribution Strategy

1652 Words Apr 16th, 2011 7 Pages

1. What are Amazon’s primary sources of competitive advantage? Analyze how they built their competitive capabilities over the years.

The following can be considered to be the primary sources of Amazon’s competitive advantage:

• Use of Internet: Amazon uses the internet as the sole method for selling goods to its consumers. Amazon’s competitors, such as Barnes and Noble, and Borders use brick and mortar as their main distribution channel. This method of using many store fronts is extremely costly. Thus, Amazon’s competitors are at a disadvantage because their costs are significantly higher than Amazon’s costs, allowing Amazon to sell the same goods at a lower price. • Amazon
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By efficiency we mean both cost and lead times.

2. Describe (and also show diagrammatically) Amazon’s order fulfillment model(s) in the US. Provide your evaluation of Amazon’s order fulfillment strategy - what are its strengths and weaknesses? How does Amazon monitor the performance of their order fulfillment execution?



As shown in the figure above, the Amazon’s order fulfillment model in the US was a simple one. Later on they did introduce the concepts of:

• Drop ship • Partner ship • Inventory integration • Notion of paying more for fast delivery • Postal Injection

The model runs as follows:

• A customer orders his product online through the internet. • Amazon’s i2 software has already determined the demand for the product, DC’s location for the customer and whether the requested item is in the warehouse or has to be ordered. • Depending on the situation, the order is parsed either to the wholesaler (Ingram)/Publisher or to the convenient DC. It has to be kept in mind that each DC maintained a full product line inventory. • Next, it was supplied to the customer within 1 or 2 days via the UPS/USPS.


• Due to large increase in