Customer Fulfillment in the Digital Economy Amazon.Com

5560 Words Nov 4th, 2012 23 Pages
Customer Fulfillment in the Digital Economy

Amazon.com

E-tail Customer Fulfillment Networks Pioneer
“The logistics of distribution

Scorecard

are the iceberg below the waterline of online bookselling.”1

B-web type

—Jeff Bezos, founder and CEO, Amazon.com

• Aggregation (e-tail) /Agora
(auctions, Zshops) hybrid model

KEY PARTICIPANTS

“Ten years from now, no one will remember whether

Consumers and business buyers

Context providers




Content providers



Amazon.com and small online merchants (Amazon.com associates, Zshops, auctions)
Suppliers and b-web partners
(publishers; producers [OEM]; distributors e.g. Ingram Micro,
Baker & Taylor Books, and others)

Customers

Amazon.com spent an extra
$100,000 upgrading shipping from the
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With a market capitalization of approximately $31.4 billion (as of November 1999), 12 million loyal customers, 18 million items on sale, projected 1999 sales of $1.4 billion, and the most recognized brand name on the Internet,5 Amazon.com aspires to become the supermall of choice for online shoppers. Its recipe includes innovation driven by “customer obsession” and the ability to provide a secure, enjoyable shopping experience online, but its dominance is due to a customer fulfillment process that delivers.
A carefully orchestrated and adroitly executed “sell all, carry few” strategy explains Amazon.com’s success with e-tail customer fulfillment. Its business web
(b-web) (for books) includes Ingram Book Group and
Baker & Taylor, the two largest book wholesalers in the
US, as well as dozens of others. In 1998, Amazon.com obtained 60% of its books through Ingram, which operates seven strategically located US warehouses.
Amazon.com pays Ingram a wholesale markup a few percentage points above the publisher’s price for its drop shipping services.6

How has Amazon.com responded to these formidable challenges? First, to increase revenue per customer, Amazon.com added product lines or