Amazon and what it is one of the most innovative inventory techniques.
PLEASE WATCH THE YOUTUBE CLIP BEFORE READING:
Amazon is such a huge global online store. It started as a bookstore, yet today you practically can buy anything. One of the main reasons why Amazon has become so successful is because of their inventory tactics and fast delivery. They have partnered up with UPS which brings out a great example of a business to business model.
In class, we focused on two questions that ties down to inventory:
1. How much to order?
2. When to order?
In addition, we discussed 4 types of inventory:
Amazon strictly deals with finished goods. What makes them so successful is the way the business operates. Many people would not think of amazon as an assembly line, in fact, it sort of it. The way it works is that an order is being placed. One person would tag the box with the order, the second would go around the warehouse and packaged the order goods, 3rd would label the box and drop it off at the shipping station.
In addition, many of amazon products are at your home. Customers have the option of selling their books and more through amazon. This way, amazon acts as the middle man. You are solely responsible for shipping your good. Amazon will charge you a small fee for using them as the selling vendor. Because of the way Amazon does business, they are extremely efficient when it comes to inventory related costs. Correct me if I am wrong, but one of the only costs that Amazon may be concerned about for some items are Holding or Carrying costs. Some of the products will never sell. Will Amazon just drop the price of the product or completely destroy it because the carrying costs exceed the projected revenue?
Many of you may not know, however, Amazon was the inventor of the “Shopping Cart.” What a great invention that almost every online vendor took advantage of.
Lastly, I believe that Amazon sparked the popularity of online shopping. Because of the world wide shipping, convince and such a wide variety of product and low prices, there is no reason for you to leave your house to order your favorite book or DVD. Amazon actually, is one of Wal-Mart’s main competitors. I think that one day, the popularity of online shopping will exceed the need for BestBuy and Wal-Mart. It’s only the matter of time.
15 thoughts on “Amazon and what an amazing Inventory tactic. VIDEO clip attached.”
It is unreal to look at the warehouses for amazon. They have created an entire new way to buy a variety of products with ease and for a good price. They have companies like Best Buy shaking in their boots. Amazon is here to stay and it will only get better. I am a big fan of the free super saver shipping option that is offered on some products.
Our technology is growing more than ever before, which helps make a lot of consumers extremely happy. When Amazon came into the market it started off by only distributing books but now the company has grown to selling items we wouldn’t imagine.
The company has made consumers lives a lot easier, by being able to purchase items through there company. If you can’t find it in the store, Amazon will most definitely have it and most likely at a reasonable price. What more can you ask for? And all this happens within a click of a button.
It is unbelievable that an online company is competing with Wal-Mart! With Wal-Mart being a million dollar corporation and having a wide range of years on Amazon, you know that amazon must being doing pretty well to be on the standard.
Online Retailing has now gone worldwide, everyone seems to be running to there nearest computer when they need something then running to your closest store. Things are changing as we speak, and the world only awaits what more is to come.
Amazon is the world’s largest online retailer and this company’s success did not come by chance. Amazon spent hundreds of millions of dollars on developing software systems to help improve their quality service. One of the great decisions amazon made was they followed a system in scanning inventory and storing them in specific places so that they can maximize their storage space. In addition to that, it will be easy for the company to keep track of their inventory(thats how they know when to offer the free super saver shipping). Another thing is how their assemble line operates; it is quick, efficient and there is almost no chance for errors. Because every item is scanned before its in the box and every box is labeled automatically. I believe that Amazon is far ahead of their competitors and their hard work is paying off.
Amazon’s take on the online business model truly is revolutionary, but what makes it stay revolutionary is its ability to keep up the innovations (such as “the shopping cart”). As long as it can keep ahead of the innovation curve (like Apple) it can stay a leader. I think it would be unfair however, to forsake the brick-and-mortar stores in favor of Amazon, because if anything, those stores give a face to the products that Amazon sells for a cheaper price.
Amazon has a brilliant supply chain and middle man structure. I agree with the other commenter that the warehouse is very cool. I did read that amazon was apart of the online shopping system, I do believe that Charles Stack created online shopping in 1992 called books.com, still it was smart of them to take advantage of the idea and begin to call it a “shopping cart”. They certainly set the tone for online shopping and still have a strong hold on the market. So it appears they still know what they are doing. Great video and idea for a post.
Amazon is actually looking at a shift in strategy based around major metro areas. For quite a while, Amazon has avoided charging sales tax by not having any physical locations within a state. As states have started forcing Amazon to collect tax within their borders, Amazon finds itself with no reason to not open up warehouses in these population centers. Amazon’s next step now appears to be pursuing a same day delivery strategy. I believe traditional retailers may regret using their lobbyists to influence politicians an have laws crafted to force Amazon to collect sales tax. In the past, a two or more day wait was long enough to stop you from purchasing certain items from Amazon, if they successfully implement same day delivery based upon local warehouse I believe major retailers will suffer more than if they had left things alone.
Amazon under pressure from other major retailers because of the sales tax issue may actually be hurtful those business. Amazon is not being forced to collect sales taxes, they just stopped fighting. The reason is because they are smart. Why fight when they can actually destroy the local retailers by setting up little distribution centers in metro areas. Now they can ship items the same day! So for those retailers be careful what you wish for when your fighting one the largest and most successful retailers.
I have to believe that Amazon saw a boost in their business as a result of their Amazon Prime service. With the annual fee customers are now able to receive two day free shipping on all products shipping directly from Amazon. Then on the inventory side Amazon is able to reduce their inventory costs since many products they warehouse are actually owned by 3rd party companies. These companies actually pay Amazon for the storage and shipping services. They are effectively getting paid on the input and output side of product delivery.
This is something I noticed too when I last sold something on Amazon. The option for “Fulfillment by Amazon” come with a fee (something that wasn’t clear unless you read carefully in the contract). Luckily I did read carefully but for the first few moments I thought it would have been easier and safer for Amazon to ship the items for me. In the past, I had run into problems with the shipping&handling part of the transaction (my shipped item would get lost along the way). On top of that, by being the middleman, Amazon collects fee from the sellers (though they give the sellers some credit for shipping cost). Truly, they are smart because they don’t just charge and charge but they also give. For someone like me, I feel much better even though I know I’m still paying more for what I’m getting back (in term of fees versus the shipping credit).
Again, Amazon has made a name for itself as being reliable and fast shipping. It’s still amazed me everything I order from Amazon to see how fast my items arrive.
Amazon was able to get its foot in the door of industries across the board, the most recent and prevalent for small business has been their Web Services Division (AWS). It is amazing to see a company compete with Wal-Mart then turn around and go head to head with fast growing world of IT. They have found a way to profit off of businesses, while actually saving those business thousands, even millions of dollars. For example Facebook’s Instagram started as a 12 man show and sold for around a billion dollars after less than two years of existence. Those 12 people were able to accomplish the work of around 20 or 30 people with the help of Amazon Web Services. They cut costs for small and large business across the board by providing a cheaper alternative for establishing an IT infrastructure. Companies don’t have to plan for, or buy, servers, or worry about the future server space they may need with growth. Amazon Web Services has provided a way to satisfy these IT needs, while also allowing flexibility to its customers for their future needs.
Your post reminds me of how Amazon does a good job of online shopping all around the world. Not only it’s the biggest online shopping business in U.S., it also brings a huge influce to online shopping industry to China. When several a decade ago, no one used online shopping in China because they thought online shopping is not trust worth. However, when amazon came, their services and convinience of shopping broke the traditional idea of shopping and soon online shopping became so popular around China. I think Amazon’s sucess is heavily structured on its operation of controlling inventory and its delivery services. And these extraodinary ideas is based on its coroperation with many other companies (suppliers). Companies consign their goods on Amazon’s website. Amazon is just acting as a middle man and privides both costomers and sellers a great platform to complete their business. In addition, Amazon’s coroperation with UPS pushes its delivery services to a high level.
I definitely find that Amazons selling tactics are very beneficial for all selling vendors. Amazon is one of the biggest online retailers and competitors such as Ebay don’t qualify or even equal in success. Amazon sells at large volume, which causes a decrease in selling prices which gives customers the upper hand. I find this to be very beneficial. As you mentioned, doing a partnership with UPS was also a very smart strategic move that Amazon made. Lets hope that Amazon will only progress and sticks to its current business plan.
Our technology is growing at an extraodinary rate. Each day more and more things are becoming computerized. There in no doubt in my mind that in the future more and more people are going to use Amazon as their primary way of shopping. Amazon’s incredible prices and fast service will likely make up a greater portion of the shopping that will be done in the future.
The two questions regarding inventory is very important. Amazon’s decision to manage only finished goods is highly effective because it can simplify and enhance sales forecast accuracy. It avoids various forecasting variables that can create ambiguity, such as product life cycle. Online shopping provides Amazon with information that can better approximate customer demands by tracking buying behavior (course cart, clicks, etc.).
Also, based from the picture and video, it seems that plant utilization is used well and highly automated. It is apparent that Amazon monitors its capacity and inventory levels to avoid having excess inventory on hand or stocking out.
Amazon has also been able to extend this process to Europe pretty successfully. For example, because of the Eurozone they ship from one European country to the next without any increased fees (including the UK in most cases), and even the free shipping option there is fast. Plus, they ship books in Europe for free regardless of how much one purchases. All of this is a huge advantage for their customers, which is one of the reasons they have been so successful there.