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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 includingamazon sstockpricewhichhadreachedarecordhighof 106 49inDec 1999 Fulfillmentnetwork 8 2000 2002Optimizingthecustomer Inthiscontext JeffBezosacknowledgetheneedforprofitabilityand astrongerfocusonoperationalexcellence whichmeanstreatingcustomersrightbutatlowercost Fulfillmentnetwork 9 2000 2002Optimizingthecustomer JeffWilke thenewvicepresidentofoperationsatamazon quicklylaunchedseveralinitiativestoreducecostsassociatedwithstockingandshippinggoods StreamliningUSDistributionCenters ProcessesInventoryCostsDeliveryProcesses Fulfillmentnetwork 10 2000 2002Optimizingthecustomer Byasetofmeasures Amazonreducecostsassociatedwithstockingandshippinggoods Fulfillmentnetwork 11 AinEurope LaunchingAmazonintheUKandGermanyLaunchingAmazoninFranceAmazon sChanllengesinEuropeQrganizationofAmazonEuropeanSubsidiariesGoingForwardAssessingtheEDNOpportunity 12 LaunchingAmazonintheUKandGermany 1998AenteredtheEuropeanmarket targetingthetwocountries theUKandGermany thatrepresentedboththelargestonlinemarketsandthelargestmarketsforbooksinEurope 13 LaunchingAmazonintheUKandGermany 14 LaunchingAmazoninFrance 2000 9 AmazonlaunchedFrance 15 AinEurope Attheendof2000 theinternationalsegmentofAmazoncomprisingtheUK German andthenewlylaunchedFrenchandJapan launchedinNovember2000 sitesreached 381millioninsales accountingfor13 8 ofthecompany stotalrevenue Internationalsalesgrew74 in2001toreach 661million accountingfor21 ofsales 16 GoingForward By2002 internationalrevenueswere 1 2billion 35 ofAmazon stotalrevenue Goingforward AmazonexecutivesinSeattleplannedtorolloutsomeproductcategoriesandfunctionalitiesalreadyavailableinUS SoAmazonEuropeneededtobuildupitsinfrastructuretosupportthisambitiousvision TomTaylorwastransferredfromSeattletoLondontoaddresstheseissues 17 AssessingtheEDNOpportunity TomTaylorshouldconsiderwhetherAmazonneededthreeindependentdistributioncentersorcoulditbuildaEuropeandisreibutionnetwork EDN TayloralsohadtoconsiderthebenefitsofanEDN function locationandtheimpactoftheimplementationoftheEDNoninternaldepartments Ina
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