Amazon Case study
As seen from 2014, Amazon.com1 is a no brainer of a business proposition. Today you can buy most things from Amazon.com – books, movies, health and beauty products, appliances, sporting goods…..online and the company will ship these purchases to your home the same day and often at little or no cost to you. The typical 2014 university student has grown up with the World Wide Web and eCommerce and takes these services for granted. For its part Amazon recorded revenues of $17.09 billion dollars in 2013 but for all that activity, the company did not yield a profit. According to its founder and CEO Jeffrey P. Bezos, Amazon strives to be the retailer of choice for all things and for all people globally. To this end, Amazon’s profit margins on most products are razor thin and its business practices regarding free shipping and generous return policies erode earnings. Still there is no question that Amazon.com is one of the darlings of the new millennium’s Internet economy and a trend-setting retailer in the era of online retailing.
In contrast, Amazon’s early history was marked by startling losses and lots of red ink. Why was this so? To understand Amazon’s origins, we must go back to 1994 when Bezos worked for the Shaw grocery store chain and read a study that predicted the Internet would explode in popularity. He figured that before long people would be making money selling over the Web. After considering any number of products to sell online, he settled on books, a standardized product already electronically cataloged, that could be easily managed through an automated supply chain system. Most notably, the typical book store typically managed an inventory of two to three thousand books whereas his imagined online service that would carry them all. In Bezo’s business model, he would disintermediate the retail process, eliminating stores and warehouses. Instead his customers would purchase their books from catalogs on his company’s Web site. Orders would be
In contrast, Amazon’s early history was marked by startling losses and lots of red ink. Why was this so? To understand Amazon’s origins, we must go back to 1994 when Bezos worked for the Shaw grocery store chain and read a study that predicted the Internet would explode in popularity. He figured that before long people would be making money selling over the Web. After considering any number of products to sell online, he settled on books, a standardized product already electronically cataloged, that could be easily managed through an automated supply chain system. Most notably, the typical book store typically managed an inventory of two to three thousand books whereas his imagined online service that would carry them all. In Bezo’s business model, he would disintermediate the retail process, eliminating stores and warehouses. Instead his customers would purchase their books from catalogs on his company’s Web site. Orders would be