Supply chain and Distribution Network of Amazon in European Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

Supply chain and Distribution Network of Amazon in European Case Study Solution

Abstract

The case illustrates the Amazon strategy to capture the different market, by trenching its supply chain with special focus on Distribution strategy. The company has been established with an aim to offer selling books allover in US,through the use of Ecommerce platform. With the passing time and increasing reputation of the business plan along with the opportunities of globalization, the company expanded the operations in Europe with country France, Germany and UK. Since, Europe customer base is totally different from US and that it is a home country, Amazon needs to devise the business strategies along with distribution strategies.To cope up with competition and expand its offerings and reach, in order to gain profits and super succeed the US market in terms of profits. Tom Taylor, the director of European supply chain department has to decide among different alternatives about, which strategy to pursue that offers a balanced trade off between cost and benefits.

Keywords: Web industry, Ecommerce, Amazon, Europe, Globalization strategy, Adaptation strategy, Supply chain, Distribution network strategy.

Supply chain and Distribution Network of Amazon in European Countries

Amazon.com started the business, by identifying the emerging trend of Ecommerce in US markets and tap the market by integrating the Ecommerce and Book reading culture of US market. Over the period of time, Amazon expanded its offering from books to music and then to toys, in order to cater different market segment of US. After the globalization hit the world, the company initiated its operation in second biggest market of the earth- Europe, in which France, UK and Germany were identified as the key markets for Amazon.Since, many new entrant like Walmart and local entrant like Bol.com entered the market making competition stiff.The company shift its value proposition to distribution network, in order to increase the efficiency of the process in Europe.

Background/Overview

Jeff Bezos established the Amazon Company in 1995, with an aim to offer exceptional book buying service all over the US. The company started with selling the books online with efficient delivery. It incorporated 1000 titles at initial, which rose to 25000 titles within a year. The company merely depends on its supplier namely Ingram. Over the period of time, Amazon incorporated additional products and services like music CD’s, DVDs and kitchen equipment’s to align itself, with the increasing market trend of using ecommerce for shopping.

Amazon operated by maintaining the inventory and by establishing its own Distribution centers, to expedite the delivery of the product. After the over-whelming response in the initial year, Amazon expanded its Distribution center and opened a new DC of 250,000 square feet DC in Seattle.In addition, the company also established the relationship with the publishers to procure the products (books) at low cost (41%), which remain 49% in case of purchasing from wholesalers.However, due to the delay in delivery from publishers, the company primarily focused on Wholesalers as a part of its supply chain. Also, in order to improve and expedite the supply chain process and delight the customer expectation, the company incorporated different supply chain software in its Distribution centers, to mitigate the chances of wrong delivery whole.On the other hand, make the process through order placement, to order delivery efficient. In doing so, Amazon employee supply chain RFID techniques, to make the supply chain process efficient that will offer the company a competitive advantage over the competition.In offering the quick delivery, through integrated supply chain operations. Also, the company partnered with i2 Technologies, in order to balance the operating cost and reduce the risk of obsolesce of toys. Not only this, the company also incorporated Six Sigma and Total quality management process, in order to make the operations efficient and reduce the number of errors, that helped the company in maintaining the operating cost and also offering exceptional customers services to the customers, flanking the competition in the market. Moreover, Amazon also introduced the process in expediting the delivery, in which the delivery is arranged directly from supplier that reduce the number of days in delivery and created a strong image on costumers mind.

Through these steps and success gathered in US, the company initiate to step into European market with standardized offerings. The countries selected are France, UK and Germany, These three counties have extended trend of book reading and online purchasing. However, the European land scape performs differently as compared to USA.In European market, Amazon adopted the adaptation strategy, due to different culture and buying behavior of the customer,along with different market forces. In Europe, Amazon offered free delivery feud, to restriction from government in controlling the process.Hence, to offer a value, Amazon offered free delivery in these markets. Due, to the size and growth in Europe market, the revenues accounted to the years raised to 10% of the total revenues. However, the main issue lies in operating in European market,is the establishment of the supply chain and distribution network.In doing so, the company has to decide over different alternatives, to cater the market and expand the sales margin. Under these alternative, the main focus of the company on the establishment of EDN center- a centralized European distribution Network, to cater the market needs of the three countries,while not compromising the efficacy of the supply chain.

Supply chain and Distribution Network of Amazon in European Harvard Case Solution & Analysis

Problem Recognition

The main problem Amazon faces while entering into European market,is the maintenance of its efficient supply chain in Europe, while remaining cost effective .In doing so, the company faces changes, in applying one of the three options available to the company. The options include(i) developing an integrated distribution system for all three countries (ii) Developing a separate distribution network for each country, (iii) grouping the products on the basis of preferences of each region,thus reducing the inventory cost............................

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