Amazon.coms European Distribution Strategy Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

Introduction

Amazon.com, Inc. or (Amazon.com), came into existence on May 28, 1996, serves the consumers through its tremendous retail websites and moreover focus on the excellent price, selection and convenience. The Company offers a wide range of programs that actually enables many sellers to sell their desired products on its Web sites and even their own branded Web sites and to accomplish orders through them, and programs that actually allow musicians, filmmakers, authors, application developers and others sell and publish content. The Company operates in two different segments that is North America and on International basis. The Company actually serves customers through its professional retail websites, and focus on price, selection and convenience. The Company designs its entire pool of websites to enable millions of their products to be sold by the company itself and by the third parties across more than dozens of product categories.

Case Description

This case describes how Amazon's distribution system grows from the company's overall inception. In 2003, Amazon Europe must make a decision how to restructure its distribution network in light of predictable growth, products explosion, and current geographical expansion in Europe. Moreover, it also examines how distinctiveness of customer’s and various suppliers differ across the markets, which are actually served by Amazon in Europe. The central character must consider the degree of centralization quiet appropriate for the entire European network, where supply should be held, what fulfillment models and solution should be used, and how to handle the risks of supply disruption which occur on a daily basis.

Tom Taylor, Amazon.com's, Director of the overall European Supply Chain management has to take a call on the modifications Amazon needs to make to maintain its growth in the European market place. Although they were doing a good job, but Amazon Europe is faced with numerous expansion options:

To imitate the broad collection of product lines, Amazon offered in the United States
Launch new market and branding Activities.
Expand into other European territories and countries.

Tom's boss has actually set an objective for him to assist Amazon Europe catch up with Amazon US in the next 5 years, which he be expected to do in a year or by 2004. The vital decision that Tom needed to craft was how to put together, the distribution network strategies that would most suitably support Amazon Europe's growth. Tom's early focal point in Europe was to look for maximum consistency and synergies among operations procedures across the three dissimilar European countries that Amazon Europe actually served. During this span of time, Amazon Europe pursued a decentralized fulfillment model which seemed to offer chances for cost savings and rationalization. Tom saw an enormous potential in developing a European Distribution Network (EDN) where the overall location of supply will be strategically, rather than geographically determined. Intrigued by this excellent opportunity, Tom has laid out promising payback to Amazon Europe.

Amazon international comprising of Amazon Japan and Amazon Europe gives 35% of the total revenue earned by the Amazon. These both segments were the fastest growing segments of the entire company. Since the market is getting competitive, therefore the company started facing issues related to expanding opportunities and handling of their excellent supply chain. It could somehow replicate the broad range of product lines which is offered by Amazon in specifically U.S, can launch new activities in the market and can expand into other European countries as well. First the Amazon Europe needs to build their infrastructure to support their valuable vision in an optimistic manner. Mr. Tom was transferred to London back in 2002 to look after these issues effectively. The decision needs to be taken by tom that which infrastructure should be supportive to the Amazon in Europe.

There are multiple problems in the case. For example, they were in a dilemma that should they build a new European distribution network (EDN) where the location of the supply would be determined on a strategic basis rather than geographic basis or they should need completely independent DC’s in Germany, UK and France. Moreover company should also be worried about that out of several potential alternatives to plan European distribution network (EDN), which alternative should be given importance over another. Another issue could be the linking problem that either these different sites should be linked with a single European distribution network (EDN) or to keep the three distribution network for these purposes. Moreover, it is also a possibility that they might go for only two DC’s, out of which one would serve the south European customers and another one would serve north European customers.

By the implementation of European distribution network (EDN) there would be a massive impact on transportation. This would for sure reduce the delivery service level and more over the issues related to the customer's satisfaction. Moreover .............

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Describes how the system of distribution of Amazon came from the company's inception. In 2003, Amazon Europe must decide how to reconfigure its distribution network in the light of the expected growth, food distribution, and geographical expansion in Europe. Explores how the characteristics of suppliers and customers differ in markets Amazon offers in Europe. The main character has to take into account the degree of centralization appropriate for the European network, where inventory should be held that the execution of the model should be used, and how to manage the risk of supply disruption. "Hide
by Janice H. Hammond, Claire Chiron Source: Harvard Business School 28 pages. Publication Date: June 30, 2005. Prod. #: 605002-PDF-ENG