Amazon Ebusiness Essay

virago was founded in 1994, spurred by what Bezos call(a)ed regret minimization role model, his effort to f annul off regret for not s fetching a arrogate in the Inter clear up gold rush. Company lore says Bezos wrote the patronage course of study art object he and his wife drove from New York to Seattle , although that account appears to be apocryphal. The teleph mavenr began as an online entertainshop while the largest brick-and-mortar book m iodintary funds and mail- golf-club catalogs for books might beseech 200,000 titles, an online bookstore could offer to a greater extent. Bezos named the keep company virago after the worlds largest river. Since 2000, viragos logotype is an arrow leading from A to Z, representing utilisationer bliss (as it forms a smile) a goal was to let e precise output in the alphabet. In 1994, the company in incorporatedd in the state of Washington, beginning receipts in July 1995, and was reincorporated in 1996 inDelaw be.The outset book am azon.com sold was Douglas Hofstadters fluent Concepts and Creative Analogies Computer Models of the Fundamental Mechanisms of Thought. amazon.com issued its initial public go of threadb be on May 15, 1997, trading under theNASDAQ stock exchange sign AMZN, at an IPO price of US$18.00 per share ($1.50 after trey stock splits in the late 1990s). amazons initial furrow plan was unusual the company did not expect a expediency for four to five long condemnation.Its slow growth provoked shareholder complaints that the company was not reaching breadability fast enough. When the dot-com riffle burst, and numerous e-companies went out of business, virago pers of all cartridge holdered, and finally turned its first profit in the fourth quarter of 2001 $5 trillion or 1 per share, on revenues of more than $1 one million million, besides the modest profit was important in demonstrating the business model could be profit equal. In 1999, magazine magazine named Bezos soul of the Year,recognizing the companys success in popularizing online shopping. virago.com products and values amazon product lines include books, practice of medicine CDs, videotapes and DVDs, software, consumer electronics, kitchen particulars, tools, lawn and garden features, toys & games, baby products, apparel, sporting goods, gourmet food, jewelry, watches, health and personal-care tips, beauty products, musical instruments, clothing, industrial & scientific supplies, and groceries. The company casted amazon.com Auctions, a web auctions helping, in March 1999. However, it failed to chip away at industry introduce eBays large market share. virago.com Auctions was followed by the launch of a fixed-price grocery store business, zShops, in family 1999, and the now defunct Sothebys/ amazon confederation called sothebys.amazon.com in November. Auctions and zShops evolved into amazon Market site, a service launched in 2001 that let guests rat occasion books, CDs, DVDs, and ot her products alongside new items. Today, virago Marketplaces main rival is eBays Half.com service. In wonderful 2005, Amazon began sell products under its throw private label, Pinzon the earmark applications indicated that the label would be apply for textiles, kitchen utensils, and other household goods.In March 2007, the company applied to expand the trademark to c everyplace a more diverse list of goods, and to register a new design consisting of the word PINZON in stylized letters with a notched letter O whose space appears at the one oclock position..Coverage by the trademark grew to include items much(prenominal) as paints, carpets, wallpaper, hair accessories, clothing, footwear, headgear, cleaning products, and jewelry.On September 2008, Amazon filed to render the name registered. USPTO has accurate its review of the application, and Amazon has yet to receive an official allowance for the name. Amazon MP3, its overhear online music store, launched in the US in Se ptember 25, 2007, selling downloads exclusively in MP3 format without digital proper(ip)s oversight.This was the first online fling of DRM-free music from all four major record companies. In August 2007, Amazon announced AmazonFresh, a grocery service offering putrescible and nonperishable foods. Customers bum bring on orders delivered to their homes at dawn or during a qualify daytime window.Delivery was initially restricted to residents of Mercer Island, Washington, and was later spread out to some(prenominal)(prenominal)(prenominal)ZIP codes in Seattle proper. AmazonFresh as well operated pick-up locations in the suburbs of Bellevue and Kirkland from summer 2007 by means of premature 2008. In 2008 Amazon expanded into film production, producing the film The Stolen Child with twentieth Century Fox. Amazon.com has incorporated a fare of products and go by phylogeny and acquisitions. The Honor System was launched in 2001 to allow customers to concur donations or d emoralise digital guinea pig, with Amazon collecting a percentage of the payment irrefutable a fee. The service was discontinued in 2008. and replaced by Amazon Payments. Amazon launched Amazon Web improvements(AWS) in 2002, which provides programmatic access to latent features on its web situation. Amazon alike created channels to benefit certain causes. In 2004, Amazons Presidential Candidates allowed customers to donate $5200 to the campaigns of 2004 U.S. presidential hopefuls. Amazon has sporadically reactivated a Red Cross donation channel after crises such as the 9/11, Hurri toilete Katrina, and the 2004 earthquake and tsunami in the Indian Ocean.By January 2005, near 200,000 people had donated over $15.7 million in the US. Amazon Prime offers two day tape transport with no minimum purchase amount for a flat annual fee, as well as discounted priority shipping rates. Amazon launched the program in the continental United States in 2005, in Japan, the United Kingdom and Germany in 2007, and in France (as Amazon Premium) in 2008. Launched in 2005, Amazon Shorts offers exclusive short stories and non-fiction pieces from best-selling authors for neighboring(a) download. By June 2007, the program had over 1,700 pieces and was adding about 50 new pieces per week. In November 2005, Amazon.com began testing Amazon Mechanical Turk, an application programming interface (API) allowing programs to release travails to human processors. In March 2006, Amazon launched an online storage service called Amazon Simple Storage Service (Amazon S3).An unlimited number of data objects, from 1 byte to 5 gigabytes in size, seat be stored in S3 and distri neverthe littleed via HTTP or BitTorrent. The service charges monthly fees for data stored and transferred. In 2006, Amazon introducedAmazon Simple Queue Service (Amazon SQS), a distributed queue messaging service, and product wikis (later folded into Amapedia) and discussion forums for certain products employ guide lines that follow standard message board conventions. besides in 2006, Amazon introduced Amazon Elastic Compute Cloud (Amazon EC2), a virtual site farm, allowing users to use the Amazon foundation to run applications rangingfrom running play simulations to web militarying. In 2008, Amazon improved the service adding Elastic Block Store (EBS), offering persistent storage for Amazon EC2 instances and Elastic IP addresses, static IP addresses designed for dynamic cloud computing. In 2007 Amazon launched Amapedia, a wiki for user-generated content to replace ProductWiki, the video on demand service Amazon Unbox, and Amazon MP3, which sells downloadable MP3s.Amazons terms of use agreements restrict use of the MP3s, but Amazon does not use DRM to enforce those terms. Amazon MP3 sells music from the boastfully 4 record labels EMI, Universal, Warner Bros. Records, and Sony BMG, as well as independents. Previous to the launch of this service, Amazon made an investment in Amie Street, a music store with a variable pricing model based on demand. Also in 2007 Amazon launched Amazon Vine, which allows reviewers free access to pre-release products from vendors in outlet for posting a review, as well as payment service specifically targeted at developers, Amazon FPS. In November 2007, Amazon launched Amazon Kindle, an e-book ratifier which downloads content over Whispernet, via the Sprint Nextel EV-DO wireless network. The screen uses E ink applied science to reduce battery consumption. In 2008 Amazon stated that its Kindle-based library included 200,000 titles.In December 2007, Amazon introduced SimpleDB, a database system, allowing users of its other infrastructure to utilize a high reliability high act database system. In August 2007, Amazon launched an invitation- provided beta-test for online grocery delivery. It has since rolled out in several Seattle, Washington suburbs. In January 2008 Amazon began rolling out their MP3 service to supplementary websites wo rldwide. In December, 2008, Amazon MP3 was made available in the UK. In September, IMDB and Amazon.com launched a Music metadata browsing site with wiki- homogeneous user contribution.In November, Amazon checknered with Fisher-Price, Mattel, Microsoft and take in off to offer products with minimal packaging to reduce environmental impact and defeat with opening clamshell type packaging. Amazon Web Services launched a public beta of Amazon Elastic Compute Cloud running Microsoft Windows Server and Microsoft SQL Server. Amazon Connectenables authors to post remarks on their book pages to customers. WebStore allows businesses to create custom e-commerce websites using Amazon technology. Sellers pay a counsel of 7 percent, including credit-card process fees and fraud protection, and a subscription fee of$59.95/month for an unlimited number of webstores and listings. wherefore Amazon.com is successful as a business on internet and has smooth capabilities supported by information s ystem and e-commerce?Amazons initial business plan was unusual the company did not expect a profit for four to five classs. Its slow growth provoked stockholder complaints that the company was not reaching profitability fast enough. When the dot-com bubble burst and many e-companies went out of business, Amazon persevered, and finally turned its first profit in the fourth quarter of 2001 $5 million or 1 per share, on revenues of more than $1 billion, but the modest profit was important in demonstrating the business model could be profitable. In 1999, Time magazine named Bezos Person of the Year, recognizing the companys success in popularizing online shopping. Amazon changed the way it does business by the years. First it was an online book seller. Next it expanded into selling music and videos. Then it offered toys, consumer electronics and software to its customers. These were cerebrateed with a host of new products until this very day.Amazon has a constantly evolving product l ine. Its competitors have a hard time catching up with the innovator. During its initial years of operation, Amazon was not making any real profit. It practiced instead the habit of reinvesting its income into new markets. This it did to make possible for its customers to make wider choices for the companys offerings. Inventory monitorment is an important function for any business and its comprise- economic implementation great deal play a major role in reducing costs within a company. Policies, procedures, and techniques employed in maintaining the optimal number or amount of each bloodline item. The objective of lineage management is to provide uninterrupted production, gross sales, and/or customer-service levels at the minimum cost, Levi D. S. et al (2003). Levi explains that a high- part history management system provides a smooth and efficient picture chain by reducing costs and time. Initially when a company is upholded, key individuals may perform such tasks as pu rchasing, manufacturing or take stock control with little problem in terms of co-occur functions.But as a company expands it may be prerequisite to concentrate on core functions in the aim to have specialized personnel in every department. Each function has an important part to play in the supply chain. The elucidate management ofinventory enables a company to reduce liabilities and cost of overstocking, to streamline operations and to have split utilized staff. Amazon.com, the worlds largest online retailer and one of the nations biggest book sellers, is one of the iconic companies of the Internet era, Eells S. (2010), and by realizing the importance of inventory management can exclusively improve its supply chain. From the text we can see that when CEO Jeffrey P. Bezos went about setting up Amazon.com, he had a clear aim to offer customers a wide selection of books but at the same time did not want to spend time and notes on opening stores and stores and in dealing with t he inventory.Bezos was hesitant in deciding to maintain Amazons own warehouse but realized that this was the only way for the company to keep customers satisfied. Internet shopping was rapidly expanding and with Amazon now stretching its ranges from not only books but to CDs, toys and hardware, they too were a growing industry. Amazon began setting up warehouses throughout the US, strategically placing them in states with little or no sales tax in order to reduce costs. These warehouses were very well maintained and completely computerized, with each item having a separate code which made inventory management a lot easier. Within the large warehouses, Amazon held all products which were available on the website. This was not always a good idea as it cost Amazon money in order to stock these goods. In the vacation pacify of 1999, Bezos was determined not to disappoint any customers therefore he ordered larger amounts of every product. With this large amount of inventory, Bezos found it very difficult to manage, so aimed to rearrange the warehouses to accommodate the demand in as take regions.They then firm to outsource some of its routines activities so that they could concentrate more on their core competencies. Deciding whether to outsource or not was a difficult decision for Amazon but seen in the strategic outsourcing book by Greaver M. (1999), he explains that there quiet a number of reasons how outsourcing can be a major advantage. These points are broken into 6 headings 1. organizational reasons Enhance stiffness and focus on what you do best and likewise makes the company more flexible 2. Improvement driven reasons Improve in operation(p) performance and also management and control 3. Finally driven reasons turn off investment assets and free up these resources for other compasss of the business 4. Revenue driven reasons Gain market access andbusiness opportunities along with accelerating expansion 5. be driven reasons Reduce cost throug h superior provider performance and lower cost structure 6. Employee driven reasons Increase commitment and zip in non core areas. Amazon pertinacious to outsource its inventory management, and with this they decided not to stock every item offered on its site.It stocked only the most popular and frequently purchased items and as for the other items, they were requested from the distributer on ordering. The item would be sent to Amazon, unpacked and finally sent to the customer. Amazon entered into an agreement with Ingram Micro Inc. to use its knowledge and experience in the electronic goods and supply chain management in order to provide logistics and order-fulfillment services for desktops, laptops and other computer related accessories. From the representative, Kevin Murai, President, Ingram Macro U.S. informs everyone the advantages in which they can offer to Amazons supply chain and satisfaction of customers, The customer fulfillment services we are providing to Amazon.co ms computer store will minimize the number of touches to the product, while ensuring a seamless shopping experience for Amazons customers from start to finish. A collaborative approach was obvious from this.A collaborative partnership has receive an alternative approach to care, replacing traditional hierarchical approach as the desired approach to care. The features of collaborative partnerships are (1) Power sacramental manduction and sharing of expertise (2) the pursuit of mutually agreed on, person centered goals and, (3) a dynamic process that requires the active participation and agreement of all partners in the relationship, Elsevier M. (2006). some(prenominal) Amazon and Ingram Micro both shared the passion for customer satisfaction which was the main driving force to the success of their partnership. Amazon has place its core competencies as customer convenience and accessibility, massive selection, personalized service, quality of the site content, quality of its searc h tools and price, Mulqueen K. (2009). By entering into this partnership it gives Amazon more quality time to put into its core competencies. During the initial stages of Amazons warehousing, it aimed to have every item in stock in order to ontogeny customer satisfaction. By having this inventory, it would enable Amazon to meet the needs of the customers when they purchased the goods online.When the customer chooses the item, Amazon takes it from inventory and sent it to the respectivecustomer. We can see the logical system in which Bezos takes as he is aiming to satisfy every customer in order to build a compulsive image and reputation of the company. place this much inventory on the other can be instead costly and also for a small business which Amazon was when taking on this method can be very difficult to manage. Amazons warehouses were a quarter mile long and 200 yards wide storing millions of books. Each warehouse cost Bezos around 50 million and not only this he started to realize that having all these large amounts of stock was unutilized exchange which could be use to improve the business elsewhere. The below image (fig 1.1) gives you an idea of the scale of the warehouses and how an effective inventory management structure is vital. Learning from the difficult holiday season of 1999, Bezos outsourced some of their core competencies in order to pay more concern to other areas of the business. In our opinion this was a step in the right direction as when Amazons partners shipped the goods Amazon revamped the layout of their warehouses which makes the items easier to find and allowed customer orders to be sorted more efficiently.In early 2001, when Amazon partnered with Ingram Micro Inc., we feel that this was the correct decision for Amazon in the aim for efficient inventory management and it didnt take long for changes to be made to the stocking of inventory. Amazon decided to stock only the most popular and most frequently purchased. If an ite m which wasnt in stock, Amazon simply ordered in from the distributer and who then shipped it to Amazon where they would unpack it and send it to the customer. This may seem like a longer process but we feel this step which significantly reduce costs and better utilized Amazons finances. This is evident from the case as in December 00 their gross profit was 656.8 million where it was almost dual in December 02 where the profit was 1,074.9 million. By doing this method, inevitably Amazon reduce holding costs. This method was proving to be a lordly for Amazon as the improved inventory management helped Amazon record its first ever profit in 2001.From being initially in a dearth of $2.86 billion seven years earlier, Amazon recorded a net profit of $5 million in the fourth quarter of 2001. By Amazon outsourcing its inventory management, we could see the improvements almost immediately from their financial reports in the case. It is clear in our opinion, that Amazon made the right decision when outsourcing this function. It has minify cost by keeping fewer inventoriesand at the same time has partnered with a company with a great deal of expertise in the technology functions which can again be a major positive for the company. This limns again that outsourcing the inventory function was the correct decision for Amazon. The transfer of Amazons inventory management as shown in the case was a positive charm on the company and we feel that it was a successful task.The reason for this is straightforward Amazon has tried and tested various inventory techniques from when it was first established. At first Amazons inventory was too great and was seen to be unutilized cash. Bezos realized that this unutilized cash could possible to used to benefit over departments within the company. The task of outsourcing this area made a profit for the company immediately, at the end of 2001, Amazon had a sales record of 1.1 billion which was a 15% increase on the same period o f the previous year. Then again in 2002, we can see from the case that Amazon recorded sales of 3.93 billion which was a 26% increase on the year previous. These figures show that the task of outsourcing inventory for Amazon was an important function which has shown to get record sales for the company and along with the expertise given by Ingram Micro was boilers suit a positive influence on the company. Overall, Amazons decision to outsource its inventory management and concentrate more on other functions within the business was the correct decision in our opinion.This is proven by the increase in profit since doing so. Amazon managed to outsource this function and salve satisfy their customers which is one of their core values along with being innovative. According to businessweek.com, Amazon in 2010 had a net income of $231 million in comparison to $177million in 2009 which again is an indication that the companys decisions have only had a positive impact as the company continu es to grow. This is a positive for the company but in comparison to its main competitor, EBay had a net income of 397.65 million in 2010 which is also seen on businessweek.com. This shows that there is a lot of work through but still in order to compete with its competitors it must still strive to improve. Amazon prides itself on a strong patsy, excellent customer service and a well designed, easy to use website. Its use of E- task strategies enables the company to virgule costs better than its competitors and empower its customers by offering them choice.It could be argued that Amazons most valuable asset is its CEO and Founder Jeff Bezos. Bezos innovative zeal has grown the company fromstrength to strength and latest figures, according to the website www.siliconrepublic.com show an increase in profit of 36% to $12.95bn for 2010 from a sink to 3.7pc from 5pc at the end of 2009. In 2001, Amazons CEO, Jeff Bezos welcomed competitors rather than fighting them. This decision was ini tially seen as somewhat controversial. According to Vogelstein (2003) the decision caused such a stir in the book-publishing community that the Authors Guild formally stepped in. They wanted used books sold on a different page from newly published ones. Amazon was able to do this as a result of its efficient inventory management. Vogelstein (2003) states that Amazons warehouses are so efficient that they need to be replenished 20 times per year and they can now handle three times the volume they handled in 1999.The net result of this initiative is increased profits as can be seen from the case. The success of Amazon can be attributed to E-Business. Tedeschi (1999) state Business on the Internet is cutting significant cost out of the supply chain, with better procurement and resource planning. With Amazon, these cost savings are passed onto the end customer. by price comparison and transparency on its webpage, customers could make sensible decisions based on price. This created mas sive popularity with its customers.E-Business also creates brand strength. According to Matthewson (2002) a recent survey demonstrated the importance of online brand building, as it showed that sextuplet out of ten internet users directly typed into their browser the address of the brand they are interested in buying. The website is said to attract 81 million unique visitors each month .Amazon has capitalized on this process known as cyber-branding. This essentially promotes the company through superior customer service. Its logistics in both inventory efficiency and technology gives it a superior edge over its competitors. Its operations are very efficient due to the strategic locations of its warehouses and headquarters, which have enabled Amazon to cut a lot of its costs.The market in which amazon.com operates and how it is organized by region and countryAmazon.com has always sold goods out of its own warehouses. It started as a bookseller, pure and simple, and over the last de cade has bifurcate out into appendageal product areas and the third-party sales that now represent a good chunk of its revenue (some estimates put it at 25 percent). Both retailers and individual sellers utilize the Amazon.com platform to sell goods. Large retailers like Nordstrom, knowledge bases End and Target use Amazon.com to sell their products in addition to selling them through their own Web sites. The sales go through Amazon.com and end up at Nordstrom.com, Lands End.com or Target.com for bear on and order fulfillment. Amazon essentially leases space to these retailers, who use Amazon.com as a supplemental outlet for their online sales. Small sellers of used and new goods go to Amazon Marketplace, Amazon zShops or Amazon Auctions. At Marketplace, sellers offer goods at a fixed price, and at Auctions they sell their stuff to the highest bidder. Amazon zShops features only used goods at fixed prices.If an item listed on zShops, Marketplace or Auctions is also sold on the ma in Amazon.com, it appears in a box beside the Amazon.com item so buyers can see if someone else is selling the product for less in one of the other sales channels. The level of integration that occurs on Amazon is a programming feat that few (if any) online sales sites can match. Another sales channel called Amazon Advantage is a place where people can sell new books, music and movies directly from the Amazon warehouse instead of from their home or store. Sellers ship a number of units to Amazon, and Amazon handles the entire sales transaction from start to finish. In all of these programs, Amazon gets a cut of each sale (usually about 10 percent to 15 percent) and sometimes charges additional listing or subscription fees in the case of Amazon Advantage, the company takes a 55 percent commission on each sale. The Advantage channel is something like a warhead setup, a sales avenue for people who create their own music CDs or have self-published a book and are simply sounding for a way to get it out there.One of the latest additions to Amazons repertoire is a subsidiary company called Amazon Services. Through Amazon Services, Amazon sells its sales platform, providing complete Amazon e-commerce packages to companies looking to establish or revamp their e-commerce business. Amazon sets up complete Web sites and technology backbones for other e-commerce companies using Amazon software and technology. Target, for instance, in addition to having a store on Amazon.com, also uses Amazon Services to build and manage its own e-commerce site, Target.com. But selling goods isnt the only way to makemoney with Amazon.com. The Web sites affiliate program is one of the most famous on the Web. Through Amazons abetter _or_ abettor Program, anyone with a Web site can post a link to Amazon.com and earn some money. The link can display a genius product chosen by the fit in, or it can list several best seller products in a particular genre, in which case Amazon updates the lis t automatically at preset intervals.The associate gets a cut of any sale made directly through that link. The cut ranges from 4 percent to 7.5 percent depending on which fee structure the associate signs up for (see Amazon Associates for complete program details). The associate can also take advantage of Amazon Web Services, which is the program that lets people use Amazons utilities for their own purposes. The Amazon Web Services API (application programming interface) lets developers access the Amazon technology infrastructure to build their own applications for their own Web sites. All product sales generated by those Web sites have to go through Amazon.com, and the associate gets a small commission on each sale.References* about Ingram Micro. Online addressable from http//phx.corporate-ir.net/phoenix.zhtml?c=98566&p=irol-aboutIMOverview * Aryasri A R (2007) Managerial economics and financial analysis, 3rd Ed, Tata McGraw-Hill, New Delhi * Bolumole, Yemisi A., Frankel R., Naslun d D, 2007. Developing a Theoretical Framework for Logistics Outsourcing, Transportation Journal, e-journal, Vol. 46 Issue 2, p35-54, 20p, , Available through Business radical Premier database Accessed 18 February 2011* Coltman et al (2000) E-Business Revolution, Evolution or Hype? 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