preview

Morgan Stanley

Better Essays

Case 1. AMAZON.com

Kim Dong Kyun

1. How has amazon’s entry shaken-up retail book supplychain?

Traditionally, The book industry is the chain of “publisher-wholesalers-retail bookstores”.
However, Amazon.com made this chain or supply useless. At amazon.com, unlike traditional bookstores, there are no bookshelves to browse. All contact with the costomer is either through its web site or by email. At the firm’s web site, customers can search for a specific book, topic and etc. Customers can browse, fill up a virtual shopping basket, and then complete the sale by inputting their credit card number. Customer’s orders are processed immediately. Books in stock are packaged and mailed the same day. When their order has been shipped, …show more content…

Who has the advantage on these dimensions e-tailer has lots of advantage because they can organize integrated dimensions. They have no limit in place and distribution system apply easily
Nowdays e-retailer is growing lots of dimensions which means typical retailer’s portion becomes smaller

3.a. Why did Amazon take so long to be profitable?

Amazon.com spends a substantial amount on Web advertising and marketing. The firm spent over $340,000 for the first half of the 1996 and ranked 34th in Web ad spending. Since then, however, these expenses have gone up significantly. Also, the firm invested much on their warehouse and state-of-the-art distribution center in New Castle, Delaware. Amazon.com turned its inventory 150 times a year. This make the firm have a lower cost structure than physical stores. Their marketing and operation cost kept the firm a deficit. By August 1996, sales were growing at 34 percent a month. The firm posted revenues of $147.8 million for 1997, an 838 percent increase over the previous year. However, the net loss for fiscal 1997 was 27.6 million, compared to a net loss in fiscal 1996 of $5.6 million. The firm claims to have exceeded expectations and has made its business plan more aggressive.

3.b. What presents the best opportunities and biggest threats to sustaining profitability?

The best opportunities to sustaining profitability are Fending off formidable competitors, Leveraging the Amazon.com

Get Access