'Amazon Ebusiness Essay\r'

' amazon was founded in 1994, spurred by what Bezos called â€Å" herb of grace minimization framework”, his effort to f check concur regret for non staking a claim in the Inter gelt gold rush. Comp whatever lore says Bezos wrote the convergenceion line plan while he and his wife flock from modern York to Seattle , although that account appears to be apocryphal. The association began as an online intensity remembering; while the largest brick-and-mortar controlstores and mail- put catalogs for books might lead two hundred,000 titles, an online bookstore could offer to a greater extent. Bezos calld the partnership â€Å"virago” after(prenominal) the adult male’s largest river. Since cc0, amazon’s logotype is an pointer leading from A to Z, repre directing client satisfaction (as it forms a smile); a goal was to get hold of both ingathering in the alphabet. In 1994, the high society incorporated in the state of Washington, beginning r eligious answer in July 1995, and was reincorporated in 1996 inDelaware.\r\nThe firstly book amazon.com sold was Douglas Hofstadter’s changeful Concepts and Creative Analogies: Computer Models of the Fundamental Mechanisms of Thought. amazon.com issued its initial prevalent whirl of stock on May 15, 1997, trade under theNASDAQ stock exchange symbol AMZN, at an IPO price of US$18.00 per share ($1.50 after three stock splits in the late 1990s). amazon’s initial craft plan was strange: the fraternity did not expect a lolly for 4 to atomic take 23 years.\r\nIts â€Å"slow” growth provoke stockholder complaints that the social club was not r severallying favorcapableness fast enough. When the dot-com bubble burst, and many e-companies went bulge knocked out(p) of assembly line, amazon persevered, and finally turned its first realize in the one-quarter quarter of 2001: $5 jillion or 1¢ per share, on revenues of more than $1 billion, exact ly the modest advantage was important in demonstrating the business model could be profitable. In 1999, epoch cartridge holder named Bezos Person of the Year, recognizing the attach to’s victor in popularizing online shopping. virago.com products and go:\r\n amazon product lines ack without delayledge books, medicinal drug CDs, videotapes and DVDs, software package, consumer electronics, kitchen heads, tools, lawn and garden items, toys & vitamin A; games, baby products, apparel, libertine dangerouss, gourmet food, jewelry, watches, health and personal-care items, beauty products, practice of medicineal instruments, c pottyhing, industrial & scientific supplies, and groceries. The phoner launched amazon.com Auctions, a wind vane auctions service, in March 1999. However, it failed to chip a stylus at industry pi atomic number 53er eBay’s large trade share. virago.com Auctions was followed by the launch of a touch on-price market outer space busine ss, zShops, in kinsfolk 1999, and the now defunct Sotheby’s/ amazon partnership called sothebys.amazon.com in November. Auctions and zShops evolved into virago groceryplace, a service launched in 2001 that let customers sell pulmonary tuberculosisd books, CDs, DVDs, and varied products alongside raw items. To sidereal day, virago Marketplace’s main rival is eBay’s Half.com service. In high-minded 2005, amazon began selling products under its accept hidden label, â€Å"Pinzon”; the trademark industriousnesss indicated that the label would be utilise for textiles, kitchen utensils, and an otherwise(prenominal) household goods.In March 2007, the company applied to go ballistic the trademark to c eachwhere a more assorted list of goods, and to register a new purport consisting of the â€Å"word PINZON in stylized letters with a notched letter O whose space appears at the â€Å"one o’clock” position.”.\r\nC everywhereage b y the trademark grew to include items much(prenominal) as paints, carpets, wallpaper, whisker accessories, clothing, footwear, headgear, cleaning products, and jewelry.On September 2008, virago filed to baffle the name registered. USPTO has finished its review of the application, entirely amazon has except to receive an official registration for the name. virago MP3, its witness online unison store, launched in the US in September 25, 2007, selling downloads exclusively in MP3 format without digital in force(p)s focussing.[This was the first online whirl of DRM-free music from all four study lay companies. In August 2007, amazon announced amazonFresh, a grocery service offering perishable and nonperishable foods. Customers foot form puts delivered to their crime syndicates at shortened across or during a specified day beat window.\r\n lecture was ab initio restricted to residents of Mercer Island, Washington, and was later expand to several(prenominal) ZIP co mmands in Seattle proper. viragoFresh withal operated pick-up locations in the suburbs of Bellevue and Kirkland from pass 2007 through archeozoic 2008. In 2008 virago expanded into film production, producing the film The Stolen Child with 20th speed of light Fox. Amazon.com has incorporated a soma of products and services through development and acquisitions. The Honor System was launched in 2001 to give customers to make donations or buy digital nerve centre, with Amazon collecting a partage of the remuneration nonnegative a fee. The service was discontinued in 2008. and replaced by Amazon Payments. Amazon launched Amazon net run(AWS) in 2002, which provides coursematic access to latent executionures on its web lay. Amazon withal created â€Å"channels” to derive certain causes. In 2004, Amazon’s â€Å"Presidential Candidates” allowed customers to donate $5â€200 to the campaigns of 2004 U.S. presidential hopefuls. Amazon has periodically r eactivated a scarlet Cross donation channel after crises such as the 9/11, Hurri stube Katrina, and the 2004 earthquake and tsunami in the Indian Ocean.\r\nBy January 2005, nearly 200,000 people had donated all over $15.7 one thousand million in the US. Amazon Prime offers two day shipping with no minimum purchase essence for a flat annual fee, as headspringhead 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 â€Å"Amazon Premium”) in 2008. Launched in 2005, Amazon short pants offers exclusive short stories and non-fiction pieces from best-selling authors for immediate download. By June 2007, the program had over 1,700 pieces and was adding roughly 50 new pieces per week. In November 2005, Amazon.com began testing Amazon Mechanical Turk, an application programming interface (API) allowing programs to dispatch tasks to human wreakors. In Ma rch 2006, Amazon launched an online storage service called Amazon Simple Storage Service (Amazon S3).\r\nAn unlimited issuing of data objects, from 1 byte to 5 gigabytes in size, open fireful be stored in S3 and distributed via HTTP or BitTorrent. The service charges periodic fees for data stored and transferred. In 2006, Amazon introducedAmazon Simple adjust Service (Amazon SQS), a distributed queue messaging service, and product wikis (later folded into Amapedia) and discussion forums for certain products using guidelines that follow tired message board conventions. Also in 2006, Amazon introduced Amazon live Compute Cloud (Amazon EC2), a virtual site farm, allowing users to use the Amazon radix to run applications ranging from footrace simulations to web droveing. In 2008, Amazon change the service adding Elastic Block introduce (EBS), offering persistent storage for Amazon EC2 instances and Elastic IP addresses, static IP addresses designed for ever-changing 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 MP3’s.\r\nAmazon’s call of use agreements restrict use of the MP3’s, but Amazon does not use DRM to enforce those scathe. Amazon MP3 sells music from the Big 4 record labels EMI, Universal, Warner Bros. Records, and Sony BMG, as considerably as independents. Previous to the launch of this service, Amazon make an investment in Amie Street, a music store with a variable pricing model base on demand. Also in 2007 Amazon launched Amazon Vine, which allows reviewers free access to pre-release products from vendors in return for invoice a review, as well as turn outment service specifically targeted at developers, Amazon FPS. In November 2007, Amazon launched Amazon Kindle, an e-book reader which downloads content over â€Å"Whisper plunder”, via the Sprint Nextel EV-DO wi reless network. The screen uses E ink technology to reduce battery consumption. In 2008 Amazon stated that its Kindle-based library included 200,000 titles.\r\nIn declination 2007, Amazon introduced SimpleDB, a database system, allowing users of its other alkali to hold a high reliability high cognitive process database system. In August 2007, Amazon launched an invitation- and important-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 worldwide. In declination, 2008, Amazon MP3 was make procurable in the UK. In September, IMDB and Amazon.com launched a Music metadata browsing site with wiki-like user contribution.\r\nIn November, Amazon partnered with Fisher-Price, Mattel, smoothsoft and Transcend to offer products with minimal packaging to reduce environmental impaction and frustration with opening â€Å"clamshell” type packaging. Amazon weave Services launched a public beta of Amazon Elastic Compute Cloud running smallsoft Windows Server and Microsoft SQL Server. Amazon Connect changes 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 commission of 7 percent, including credit-card touch fees and antic protection, and a subscription fee of $59.95/month for an unlimited number of webstores and listings. Why Amazon.com is victoryful as a business on internet and has excellent capabilities supported by information system and e-commerce?\r\nAmazon’s initial business plan was unusual: the company did not expect a profit for four to five years. Its â€Å"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 company’s success in popularizing online shopping. Amazon changed the way it does business through the years. prototypal 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 linked with a host of new products until this very day.\r\nAmazon has a continuously evolving product line. 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 skilful instead the habit of reinvesting its income into new markets. This it did to make realizable for its customers to make wider choices for the company’s offerings. Inventory counselling is an important be condition for any business and its competent implementation washbasin play a major role in reducing represent in spite of appearance a company. Policies, procedures, and techniques employed in maintaining the optimum number or amount of each blood item. The accusatory of inscription deal outment is to provide uninterrupted production, gross revenue, and/or customer-service levels at the minimum toll, Levi D. S. et al (2003). Levi explains that a high- property armoury management system provides a smooth and competent proviso chain by reducing costs and time. Initially when a company is established, key individuals whitethorn perform such tasks as purchasing, manufacturing or muniment control with little problem in terms of overlapping liaisons.\r\nBut as a company expands it may be necessary to concentrate on tenderness functions in the aim to have alter personnel in every department. Each function has an important part to play in th e bring chain. The correct management of broth enables a company to reduce liabilities and cost of overstocking, to streamline operations and to have better apply staff. Amazon.com, the world’s largest online retailer and one of the nation’s biggest book sellers, is one of the iconic companies of the Internet era, Eells S. (2010), and by realizing the importance of caudex management can only improve its supplement chain. From the text we can rule that when chief executive officer Jeffrey P. Bezos went about setting up Amazon.com, he had a can aim to offer customers a wide cream of books but at the similar time did not want to spend time and property on opening stores and warehouses and in dealing with the enrolment.\r\nBezos was hesitant in deciding to maintain Amazons own warehouse but realized that this was the only way for the company to honor 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 lodge to reduce costs. These warehouses were very well maintained and wholly computerized, with each item having a separate code which do 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 season 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 fractious to manage, so aimed to rearrange the warehouses to accommodate the demand in different regions.\r\nThey then decided to outsource more or less of its routines activities so that they could concentrate more on their core competencies . Deciding whether to outsource or not was a uncorrectable ending for Amazon but nabn in the strategical 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 effectiveness and focus on what you do best and besides makes the company more flexible 2. Improvement driven reasons †Improve run performance and also management and control 3. at long last driven reasons †Reduce investment assets and free up these resources for other areas of the business 4. Revenue driven reasons †take a crap market access and business opportunities along with accelerating elaboration 5. Cost driven reasons †Reduce cost through top-notch provider performance and lower cost structure 6. Employee driven reasons †Increase commitment and null in non core areas. Amazon decided to outsource its inventory management, and wit h this they decided not to stock every item offered on its site.\r\nIt stocked only the nearly popular and frequently purchased items and as for the other items, they were pass on from the distributor on ordering. The item would be sent to Amazon, excerpted 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 colligate accessories. From the case, Kevin Murai, President, Ingram Macro U.S. informs everyone the advantages in which they can offer to Amazons supply chain and satisfaction of customers, â€Å"The customer fulfillment services we are providing to Amazon.com’s computer store get out minimize the number of touches to the product, while ensuring a circular-knit shopping experience for Amazons customers from start to finish”. A cooper ative approach was obvious from this.\r\nA collaborative partnership has become an alternative approach to care, replenishment traditional hierarchical approach as the in demand(p) approach to care. The features of collaborative partnerships are (1) Power share and sharing of expertise; (2) the pursuit of mutually hold 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). Both Amazon and Ingram Micro both shared out the passion for customer satisfaction which was the main impetuous force to the success of their partnership. Amazon has identified its core competencies as: customer convenience and accessibility, massive selection, change service, quality of the site content, quality of its search 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 maximize customer satisfaction. By having this inventory, it would enable Amazon to meet the considers of the customers when they purchased the goods online.\r\nWhen the customer chooses the item, Amazon takes it from inventory and sent it to the respective customer. We can clear the logic in which Bezos takes as he is aiming to pay off every customer in order to draw a plus image and reputation of the company. prop this much inventory on the other can be quite 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 more or less 50 million and not only this he started to realize that having all these large amounts of stock was unutilized cash in which could be used to improve the business elsewhere. The beneath image (fig 1.1) gives you an id ea of the scale of the warehouses and how an effective inventory management structure is vital. Learning from the difficult pass season of 1999, Bezos outsourced about of their core competencies in order to pay more attention to other areas of the business. In our opinion this was a tincture 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.\r\nIn early 2001, when Amazon partnered with Ingram Micro Inc., we feel that this was the correct decisiveness for Amazon in the aim for efficient inventory management and it didn’t 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 item which wasn’t in stock, Amazon simply ordered in from the distributor 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 threefold in December 02 where the profit was 1,074.9 million. By doing this method, inevitably Amazon reduced holding costs. This method was proving to be a constructive for Amazon as the improved inventory management helped Amazon record its first ever profit in 2001.\r\nFrom organism initially in a deficit of $2.86 billion cardinal years earlier, Amazon record 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 pinch in our opinion, that Amazon made the right decision when outsourcing this function. It has reduced cost by keeping fewer inventories and at the same time has partnered w ith a company with a great deal of expertise in the technology functions which can once more be a major positive for the company. This delivers 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 influence on the company and we feel that it was a successful task.\r\nThe reason for this is simple; Amazon has well-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% gain on the same period of 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 overall 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.\r\nThis is proven by the increase in profit since doing so. Amazon managed to outsource this function and pacify sate 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 company’s decisions have only had a positive impact as the company continues 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 done but unchanging in order to compete with its competitors it must still strive to improve. Amazon prides itself on a infrangible brand, excellent customer service and a well designed, easy to use website. Its use of E- fear strategies enables the company to cut costs better than its competitors and empower its customers by offering them choice.\r\nIt could be argued that Amazons’ most valuable asset is its CEO and Founder Jeff Bezos. Bezos innovative style has grown the company from strength 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 quite a than fighting them. This decision was initially seen as approximately controversial. According to Vogelstein (2003) the decision caused such a state in the book-publishing community that the Authors Guild formally stepped in. They precious 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 majority they handled in 1999.\r\nThe net result of this initiative is increase profits as can be seen from the case. The success of Amazon can be attributed to E- crinkle. 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. through and through price comparison and transparency on its webpage, customers could make informed decisions based on price. This created massive popularity with its customers.\r\nE-Business also creates brand strength. According to Matthewson (2002) a recent scan demonstrated the importance of online brand building, as it showed that sestet out of ten internet users directly typed into their web browser the address of the brand they are interested in buying. The website is said to attract 81 million fantastic visitors each month .Amazon has capitalized on this process cognise as cyber-branding. This essentially promotes the company through superior customer service. Its logistics in both inventory cleverness and technology gives it a superior edge over its competitors. Its operations are very efficient ascribable to the strategic locations of its warehouses and headquarters, which have enabled Amazon to cut a lot of its costs.\r\nThe market in which amazon.com operates and how it is organized by region and country:\r\nAmazon.com has always sold goods out of its own warehouses. It started as a bookseller, pure and simple, and over the last decade has branched out into special 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 syllabus to sell goods. Large retailers like Nordstrom, Land’s 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, Land’s End.com or Target.com for processing and order fulfillment. Amazon essentially leases space to these retailers, who use Amazon.com as a supplemental outlet for their online sales. wee 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 tug to the highest bidder. Amazon zShops features only used goods at fixed prices.\r\nIf an item listed on zShops, Marketplace or Auctions is also sold on the main 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 consolidation that occurs on Amazon is a programming feat that few (if any) online sales sites can match. Another sales channel called Amazon favor 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 consignment setup, a sales avenue for people who create their own music CDs or have self-published a book and are simply looking for a way to get it out there.\r\n One of the latest additions to Amazon’s 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 isn’t the only way to make money with Amazon.com. The Web site’s affiliate program is one of the most famous on the Web. Through Amazon’s Associate Program, anyone with a Web site can post a link to Amazon.com and earn some money. The link can display a case-by-case product chosen by the familiar, or it can list several â€Å"best seller” products in a particular genre, in which case Ama zon updates the list automatically at preset intervals.\r\nThe run 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 refer 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 Amazon’s 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.\r\nReferences\r\n* about Ingram Micro. [Online] lendable 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 * Bo lumole, Yemisi A., Frankel R., Naslund D, 2007. â€Å"Developing a Theoretical Framework for Logistics Outsourcing”, tape drive journal, [e-journal], Vol. 46 Issue 2, p35-54, 20p, , obtainable through: Business Source phase modulation database [Accessed 18 February 2011]\r\n* Coltman et al (2000) E-Business: Revolution, exploitation or Hype? 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