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,CHAPTER7,DistributionStrategies,1,1995-1998EstablishingA,1995,7JeffBezosfoundedAmazon,2,1995-1998EstablishingA,1996-1997Tosupporttheincreasedtrafficandsales,thecompanybuiltupitsinfrastructureandsystems.Distributioncentercapacitygrewfrom50000to285000squarefeet.IncreasedthenumberoftitlesheldinitsDCstoover200000attheendof1997andreducedpromiseddeliverytimesonthosetitles.Majoreffortsweremadeinsoftwaredevelopmenttosupportback-officeoperations.,3,1995-1998EstablishingA,1998,Amazonexpandeditsproductlines.Nonetheless,withtheadditionalproductlines,theinventoryturnsdroppedfrom56in1997to24.8in1998.,4,1999BuildingAdditionalFulfillmentInfrastructure,Bylate1998,thecompanywasbeginningtofacetoughtercompetitionfromplayer.So,Amazonstartedaddingnewproductlinesandfeaturesatafastpace.,5,1999BuildingAdditionalFulfillmentfrastructure,Tosupportitstransformationanditsprojectedtriple-digitgrowth,Amazonadapteditssupplychainanddistributionnetwork.,6,1999BuildingAdditionalFulfillmentfrastructure,JustbeforetheChrismas1999season,thenewdistributioncenternetworkwasupandrunning.Amazondeliveredmorethan99%ofitsordersintimeforChristmas1999.Inthefourthquarteraloneof1999,amazonshippedabout20millionitemsandacquiredmorethan2.5millionfirst-timecustomers.,7,2000-2002Optimizingthecustomer,Inearly2000,WallStreetbegantoputprofitpressureonalldotcoms,includingamazonsstockpricewhichhadreachedarecordhighof$106.49inDec.1999.,Fulfillmentnetwork,8,2000-2002Optimizingthecustomer,Inthiscontext,JeffBezosacknowledgetheneedforprofitabilityandastrongerfocusonoperationalexcellence,whichmeanstreatingcustomersrightbutatlowercost.,Fulfillmentnetwork,9,2000-2002Optimizingthecustomer,JeffWilke,thenewvicepresidentofoperationsatamazon,quicklylaunchedseveralinitiativestoreducecostsassociatedwithstockingandshippinggoods.StreamliningUSDistributionCentersProcessesInventoryCostsDeliveryProcesses,Fulfillmentnetwork,10,2000-2002Optimizingthecustomer,Byasetofmeasures,Amazonreducecostsassociatedwithstockingandshippinggoods.,Fulfillmentnetwork,11,AinEurope,LaunchingAmazonintheUKandGermanyLaunchingAmazoninFranceAmazonsChanllengesinEuropeQrganizationofAmazonEuropeanSubsidiariesGoingForwardAssessingtheEDNOpportunity,12,LaunchingAmazonintheUKandGermany,1998AenteredtheEuropeanmarket,targetingthetwocountries-theUKandGermany-thatrepresentedboththelargestonlinemarketsandthelargestmarketsforbooksinEurope.,13,LaunchingAmazonintheUKandGermany,14,LaunchingAmazoninFrance,2000,9,AmazonlaunchedFrance.,15,AinEurope,Attheendof2000,theinternationalsegmentofAmazoncomprisingtheUK,German,andthenewlylaunchedFrenchandJapan(launchedinNovember2000)sitesreached$381millioninsales,accountingfor13.8%ofthecompanystotalrevenue.Internationalsalesgrew74%in2001toreach$661million,accountingfor21%ofsales.,16,GoingForward,By2002,internationalrevenueswere$1.2billion(35%ofAmazonstotalrevenue).Goingforward,AmazonexecutivesinSeattleplannedtorolloutsomeproductcategoriesandfunctionalitiesalreadyavailableinUS.SoAmazonEuropeneededtobuildupitsinfrastructuretosupportthisambitiousvision.TomTaylorwastransferredfromSeattletoLondontoaddresstheseissues.,17,AssessingtheEDNOpportunity,TomTaylorshouldconsiderwhetherAmazonneededthreeindependentdistributioncentersorcoulditbuildaEuropeandisreibutionnetwork(EDN).TayloralsohadtoconsiderthebenefitsofanEDN,function,locationandtheimpactoftheimplementation
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