Case Study 3
Case Study 3: Fulfillment by Amazon (FBA)
MIT3220-02: Management Information Systems
1. In your own words, summarize the differences in the sales models of Amazon retain and GearUp. While both Amazon and GearUp provide similar services, reselling items, there are many differences in the sales models of these two companies. Amazon first puts goods into their inventory and then sells these goods from their inventory. They take physical possession and sell after they already have possession of the good. Amazon also sells goods on a consignment basis, but this is not their main service. On the other hand, GearUp does not purchase items until after they sell them at auctions. GearUp first sells the items and figures out how many of each are needed and then places the order for these items. They order in bulk, take ownership and after the goods are delivered to them, they repackaging and ship them to the customer (Kroenke, 2013).
2. Is GearUp able to sell its goods on Amazon.com? Why or why not? GearUp could sell its goods on Amazon, however, they would want to know ahead of time how many products Amazon would accept. In doing this, GearUp could save money on operating expenses by lowering shipping costs and inventory expenses. GearUp could sell their items to Amazon and be able to lower their shipping expenses.
3. Compute GearUp’s cost of using FBA to process:
a. An order of 10 soccer balls weighing a total of 25 pounds: $43.63
b. An order of a single soccer ball weighing 2.5 pounds: $3.38
c. The cost of a tennis outfit weighing 10 ounces. $2.68
d. The cost of sorting 1,000 soccer balls for three months. $954
4. If GearUp were to use FBA, what business procedures would it not need to develop? What costs would it save? GearUp would be able to save on shipping costs, inventory expenses, and storage expenses. By using FBA, Amazon would pay for the shipping, so GearUp would no longer have to worry about extra expenses in
MIT3220-02: Management Information Systems
1. In your own words, summarize the differences in the sales models of Amazon retain and GearUp. While both Amazon and GearUp provide similar services, reselling items, there are many differences in the sales models of these two companies. Amazon first puts goods into their inventory and then sells these goods from their inventory. They take physical possession and sell after they already have possession of the good. Amazon also sells goods on a consignment basis, but this is not their main service. On the other hand, GearUp does not purchase items until after they sell them at auctions. GearUp first sells the items and figures out how many of each are needed and then places the order for these items. They order in bulk, take ownership and after the goods are delivered to them, they repackaging and ship them to the customer (Kroenke, 2013).
2. Is GearUp able to sell its goods on Amazon.com? Why or why not? GearUp could sell its goods on Amazon, however, they would want to know ahead of time how many products Amazon would accept. In doing this, GearUp could save money on operating expenses by lowering shipping costs and inventory expenses. GearUp could sell their items to Amazon and be able to lower their shipping expenses.
3. Compute GearUp’s cost of using FBA to process:
a. An order of 10 soccer balls weighing a total of 25 pounds: $43.63
b. An order of a single soccer ball weighing 2.5 pounds: $3.38
c. The cost of a tennis outfit weighing 10 ounces. $2.68
d. The cost of sorting 1,000 soccer balls for three months. $954
4. If GearUp were to use FBA, what business procedures would it not need to develop? What costs would it save? GearUp would be able to save on shipping costs, inventory expenses, and storage expenses. By using FBA, Amazon would pay for the shipping, so GearUp would no longer have to worry about extra expenses in
References: Amazon Services. (2013). Amazon Services. On Amazon.com. Retrieved September 18, 2013, from https://developer.amazonservices.com/. Kroenke, D.M. (2013). Using MIS (6th ed.). Boston, MA: Pearson.