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CHAPTER7

DistributionStrategies1995-1998EstablishingA1995,7JeffBezosfoundedAmazon1995-1998EstablishingA1996-1997Tosupporttheincreasedtrafficandsales,thecompanybuiltupitsinfrastructureandsystems.Distributioncentercapacitygrewfrom50000to285000squarefeet.IncreasedthenumberoftitlesheldinitsDCstoover202300attheendof1997andreducedpromiseddeliverytimesonthosetitles.Majoreffortsweremadeinsoftwaredevelopmenttosupportback-officeoperations.1995-1998EstablishingA1998,Amazonexpandeditsproductlines.Nonetheless,withtheadditionalproductlines,theinventoryturnsdroppedfrom56in1997to24.8in1998.1999BuildingAdditionalFulfillmentInfrastructureBylate1998,thecompanywasbeginningtofacetoughtercompetitionfromplayer.So,Amazonstartedaddingnewproductlinesandfeaturesatafastpace.1999BuildingAdditionalFulfillmentfrastructureTosupportitstransformationanditsprojectedtriple-digitgrowth,Amazonadapteditssupplychainanddistributionnetwork.1999BuildingAdditionalFulfillmentfrastructureJustbeforetheChrismas1999season,thenewdistributioncenternetworkwasupandrunning.Amazondeliveredmorethan99%ofitsordersintimeforChristmas1999.Inthefourthquarteraloneof1999,amazonshippedabout20millionitemsandacquiredmorethan2.5millionfirst-timecustomers.2023-2023OptimizingthecustomerInearly2023,WallStreetbegantoputprofitpressureonalldotcoms,includingamazon'sstockpricewhichhadreachedarecordhighof$106.49inDec.1999.Fulfillmentnetwork2023-2023OptimizingthecustomerInthiscontext,JeffBezosacknowledgetheneedforprofitabilityand"astrongerfocusonoperationalexcellence,whichmeanstreatingcustomersrightbutatlowercost."

Fulfillmentnetwork2023-2023OptimizingthecustomerJeffWilke,thenewvicepresidentofoperationsatamazon,quicklylaunchedseveralinitiativestoreducecostsassociatedwithstockingandshippinggoods.StreamliningUSDistributionCenters'ProcessesInventoryCostsDeliveryProcessesFulfillmentnetwork2023-2023OptimizingthecustomerByasetofmeasures,Amazonreducecostsassociatedwithstockingandshippinggoods.FulfillmentnetworkAinEuropeLaunchingAmazonintheUKandGermanyLaunchingAmazoninFranceAmazon'sChanllengesinEuropeQrganizationofAmazonEuropeanSubsidiariesGoingForwardAssessingtheEDNOpportunityLaunchingAmazonintheUKandGermany

1998AenteredtheEuropeanmarket,targetingthetwocountries-theUKandGermany-thatrepresentedboththelargestonlinemarketsandthelargestmarketsforbooksinEurope.LaunchingAmazonintheUKandGermany

LaunchingAmazoninFrance

2023,9,AmazonlaunchedFrance.AinEuropeAttheendof2023,theinternationalsegmentofAmazoncomprisingtheUK,German,andthenewlylaunchedFrenchandJapan(launchedinNovember2023)sitesreached$381millioninsales,accountingfor13.8%ofthecompany'stotalrevenue.Internationalsalesgrew74%in2023toreach$661million,accountingfor21%ofsales.GoingForward

By2023,internationalrevenueswere$1.2billion(35%ofAmazon'stotalrevenue).Goingforward,AmazonexecutivesinSeattleplannedtorolloutsomeproductcategoriesandfunctionalitiesalreadyavailableinUS.SoAmazonEuropeneededtobuildupitsinfrastructuretosupportthisambitiousvision.TomTaylorwastransferredfromSeattletoLondontoaddresstheseissues.AssessingtheEDNOpportunity

TomTaylorshouldconsiderwhetherAmazonneededthreeindependentdistributioncentersorcoulditbuildaEuropeandisreibutionnetwork(EDN).TayloralsohadtoconsiderthebenefitsofanEDN,function,locationandtheimpactoftheimplementationoftheEDN

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