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.