Amazon.com has experienced exceptional growth since the company?s inception in early 1994. The company has grown to a massive online superstore with recent sales of $1.64 billion in 1999, an increase of 270% from the previous year?s sales. The stellar grow of the company?s sales can be attributed to a very strong product situation. Amazon.com?s initial target market, online book consumers, proved to be very lucrative. In addition, the expansion into more diverse product offerings beyond books, such as music, DVD & video, toys, electronics, home improvement and auctions only served to increase the company?s product portfolio. In order to expand Amazon.com?s position Insight Solutions has identified an aggressive marketing strategy to broaden the companies target market, expand the product positioning to all consumer goods, focus distribution outlets through the top ten web sites and price items at a low but profitable margin. To ensure this plan is successful, Insight Solutions also recommends four action plans involving, increasing name recognition, target market, product marketing and distribution management.
? Name Recognition? Free E-mail? Advertise on Internet Radio ? Target Market? Telephone Operators? ?Click & Mortar? Store ? Product Marketing? Expand Product lines, Auto, Travel, Grocery ? Distribution Management? Increased Distribution Centers FINANCIAL SUMMARY: SALES/COSTS/PROFITS 1 PRODUCT SITUATION ? HOME IMPROVEMENT 6 PRODUCT SITUATION ? AUCTIONS, ZSHOPS AND SOTHERBYS.AMAZON.COM 7 STRENGTHS AND WEAKNESSES ANALYSIS 12 TARGET MARKET: OWNERS OF PERSONAL COMPUTERS & SHOP AT HOME CONSUMERS 19 POSITIONING: A ONE-STOP SHOPPING ENVIRONMENT FOR ALL CONSUMER GOODS 19 PRODUCT LINE: THE LARGEST SELECTION OF SELECT RETAIL CATEGORIES 20 PRICE: PRICE AT A LOW BUT PROFITABLE MARGIN 22 DISTRIBUTION OUTLETS: ADVERTISE ON THE TOP TEN MOST POPULAR WEB SITES 22 SERVICE: EFFICIENT & WIDELY AVAILABLE SERVICE WITH FAST TURN-AROUND 23 SALES PROMOTION: DEVELOP AN ADVERTISING CAMPAIGN TO PROMOTE CONSUMER AWARENESS, NEW PRODUCTS, AND BETTER DISTRIBUTION 23 ADVERTISING: DECREASE SALES PROMOTION BUDGET BY 10% AND ADVERTISE ON HIGH TRAFFIC WEB PAGES, TELEVISION, NEWSPAPER, RADIO, AND NEW PC OWNERS 24 R & D: DEVELOP NEW PRODUCT LINES SUCH AS APPAREL, JEWELRY, AND AUTOMOTIVE PARTS 25 MARKETING RESEARCH: MONITOR COMPETITORS MORE CLOSELY & EXPLORE CONSUMER BEHAVIOR OF INTERNET PURCHASES 25 Financial Summary: Sales/Costs/Profits Amazon.com has been described as a massive flea market with not one target market, but various target markets.
The Essay on Ansoff's Product Market Grid
The Ansoff product-market matrix helps to understand and assess marketing or business development strategy. Any business, or part of a business can choose which strategy to employ, or which mix of strategic options to use. This is one simple way of looking at strategic development options: Each of these strategic options holds different opportunities and downsides for different organizations, so ...
Their categories of merchandise include books, music, DVD & video, and electronics & software to name a few. This massive ?one stop shop? has generated sales of $610 million in 1998, up 313% from the previous year of $148 million. As a result of strong sales in its new electronic store, Amazon.com claimed net sales of $676 million in fourth quarter 1999, an increase of 167% over net sales of $253 million fourth quarter of 1998. Net sales for all of 1999 were 1.64 billion, a 169% increase over net sales of $610 million for all of 1998. Pro forma operating loss for the fourth quarter of 1999 was $175 million, compared to a pro forma operating loss of $18 million in the fourth quarter of 1998. The fourth-quarter pro forma net loss was $185 million, or $0.55 per share, compared with a pro forma net loss of $22 million, or $0.07 per share, in the fourth quarter of 1998. Amazon.com?s registered customers have been dramatically growing in recent months. In 1997, the company had 1.5 million ?cumulative customer accounts? which grew to 6.2 million accounts. In first quarter of 1999 cumulative customer accounts increased by more than 2.2 million to 8.4 million. Repeat-customer orders for the quarter increased to more than 66%, up from the 1998 rate of 60%.
The Term Paper on The Tale of Captain Bookbeard: an Account of Book Piracy
The Tale of Captain BookBeard: An account of Book Piracy A bibliophilic stroll in the streets and lanes of Kolkata is bound to get across the cries of Captain BookBeard coming from the Sea of Poppies1, The Sea of Monsters2 and The Ship of Stars3, and as one starts to wonder about the whereabouts of this ever present, as almost in every pavementbookstalls, yet elusive pirate lord, a tale starts to ...
Amazon.com?s customer accounts continue to grow into the fourth quarter of 1999 with an increase of 3.8 million to more than 16.9 million at December 31. This represents an increase of more than 170% at December 31,1998. Repeat customer orders represented more than 73% of orders in the fourth quarter from 72% in the previous quarter. Amazon.com?s 1998 annual statement warned that its stellar growth would slow. The company indicated that its total deficit had grown to $162.1 million. In addition, the company?s expenses related to recent acquisitions and interest expense from February 1999 and May 1998 would affect operating cost. But the company?s more than $2 billion mixed product shelf proved to be stable in late May. There are 1.5 million English-language books in print, 3 million books in all languages worldwide. Primeda Information indicated the size of the U.S. consumer book market was $11.01 billion in 1999 and expects the market to grow to $12.45 billion by 2002. Worldwide book sales, according to Euromonitor, were approximately $81 billion in 1998 and are expected to grow to $85 billion by 2000. Online book sales in 1998 were recorded at $630 million and forecast for book sales online will represent 18% of total book sales at $3 billion by 2003.
It is also projected that 11.3% migration of the book market online by 2002. Barnesandnoble.com?s annual report cited that by the end of 1998 some 10 million U.S. households had made at least one purchase online, and that population should more than triple to 36.5 million households by 2002. This is not to signify that book sales will grow at the same rate, but there is a significant factor that most online consumers got their feet wet buying books. Domain Unique Audience % Reach / Rank Page View / Rank Time on the Site per User Amazon.com 6.38 Million 10.39% / 15 125.3 Million / 12 15 min / 60 users B&N.com 1.88 Million 3.07% / 43 16.2 Million / 84 8 min / 38 users The largest physical bookstore has 175,000 titles compared to Amazon with 1.1 million titles. If Amazon.com printed a catalog, it would be the size of seven New York City phone books. Even with Amazon.com?s extension of its product lines, book sales from the company?s U.S. base extended their lead as the number one online bookstore in the fourth quarter. There was a strong show of revenue growth to $317 million, up 66% from the fourth quarter of 1998. U.S. based book sales have now reached a rate of $1.2 billion.
The Review on Books Online Line Book
... comments, and more information about the book at interest. Could online booksellers put the million dollar retail stores out of business On a survey ... Amazon. com. In the quarter ending March 31, 1999, cumulative customer accounts increased by over 2. 2 million to more than 8. 4 million. ...
From the third quarter to the fourth quarter, the growth alone in dollars for U.S. based books for Amazon.com was greater than the total fourth-quarter sales of any other online bookstore. According to Merrill Lynch?s report ?E-Commerce: Virtually Here,? April 8, 1999, says, ?We are hard pressed to find an industry sector that is poised to benefit from e-commerce and the Internet as much as the recorded music industry.? Merrill stated that the Internet?s ability to provide more efficient and effective distribution of music. Amazon?s U.S. based music sales reached $78 million in the fourth quarter, up more than 136% fourth quarter 1998. Sales for fiscal year 1999 were $195 million. The store ended with an annualized run rate over $300 million. Amazon.com?s music team continues to listen to customer feedback and improve the features of their music stores. They?ve launched an improved classical music store, enhanced recommendation features, and additional services to promote independent artists. Amazon.com was the first online music retailer to dedicate an area of its store to offer the largest selection of free promotional song downloads from major-label artists. These valued services have led to Amazon.com?s music store domination in industry polls and earning the honor such as: ? Number one overall Internet music store in Gomez Advisors? two most recent scorecards.
? Number one ranking in the first Forrester PowerRankings for online books, music, and video retailers. ? The Harris Interactive e-Commerce Pulse Excellence Award for the highest overall satisfaction rating among online music and video retailers. ? The Midwest Award 2000 for the best music shopping/digital distribution Web site. Amazon.com?s U.S. DVD & video sales grew to $64 million in the fourth quarter, up over 500% from the fourth quarter of 1998. Sales exceeded $64 million during the fourth quarter of 1999, placing the business over a $250 million annualized run rate. More than half of the DVD & video fourth quarter revenue came from the DVD category. These figures have reinforced Amazon.com?s position as the number one online DVD and video retailer and establishing the following honors: ? Amazon.com was the industry?s number three retailer of The Matrix DVD, the biggest selling DVD in 1999 (according to Warner Home Video).
The Business plan on Online Music Distribution In A Post Napster World
Online Music Distribution in a Post-Napster World Case Study Background Information o Service has been shut down since July 2001. o June 3, 2002, Napster Filed for bankruptcy. o October 29 th, 2003, Napster will re-open with its new pay service. o Conflicting rights: 1. The rights of artists and record labels to receive payment for their labors 2. The rights of consumers to share their favorite ...
? Amazon.com was the industry?s number one overall seller, online and retail combined in 1999. ? The Amazon.com’s Advantage program for videos was launched in July 1999, helping independent filmmakers solve the problem of securing distribution for their work. ? Amazon.com now offers more than 65,000 different DVD and video titles, which is nearly seven times as large as a typical off-line DVD and video store. In the fourth quarter, sales of children?s products exceeded $95 million with a significant majority being toys. Amazon.com’s toy selection has been rated the best online toy store in an MS-NBC survey, beating out a number of longer-established players, and was ranked the number one toys and games store by Forrester Research. The Amazon.com Electronics & Software was launched in 1999. The store features a full range of popular electronic products and brands, and a complete software line of office, educational, and gaming titles. The Electronic & Software Store provides detailed buying guides and expert product reviews to help customers choose from the large selection. Amazon.com?s Electronic and Software Store exceeded cumulative sales during the store?s first five months of operation in December alone, demonstrating strong growth in the fourth quarter.
In December, Amazon.com?s overall number one product by dollar sales across all product lines was the 3Com Palm V Connected Organizer, and electronics products accounted for six of Amazon.com?s top revenue-generating items in the month. Despite the Electronic and Software Store being a new store, Amazon.com?s reputation as the best place for customers to find and discover consumer electronics has definitely been recognized. In December 1999, Amazon.com was ranked the number one online electronics store by Gomez Advisors, Inc., a leading provider of online research and analysis. Amazon.com also tied for the top overall customer satisfaction rating among online electronics retailers in a December 1999 poll conducted by Harris Interactive, a leading Internet-based market research and polling firm. In addition, more than half the Amazon.com Electronic customers surveyed recently by Amazon.com described their online experience as better than their experience in ?Brick & Mortar? stores. The survey also showed that 90% of customers said they would buy electronics from Amazon.com again. In addition, the growth and recognition of Amazon.com?s new Electronics & Software store has led to a growing interest among manufacturers in selling electronics online.
Sentence Level Semantic Classification Of Online Product Reviews
Abstract— Recent years have marked the beginning and rapid expansion of the social web, where people can freely express their opinion on different objects such as products, persons, topics etc on blogs, forums or e-commerce sites and opinion analysis is one emerging research field. As e-commerce is fast growing, product reviews on the Web have become an important information source for customers’ ...
A total of six electronics products were included in Amazon.com?s top 10 revenue-generating items for all retail stores for the month of December: ? Garmin GPS III+ Personal Navigator ? 3Com Palm IIIx Connected Organizer Product Situation ? Home Improvement Amazon.com?s Home Improvement Store experienced strong sales in Tools & Equipment during the holidays. The store was launched on November 10, 1999, offering Earth?s largest selection of tools and a broad selection of other home improvement products. The store has enabled a broad set of manufacturers such as Delta, Black & Decker/DeWalt, and Makita. February 1, 2000, Amazon.com announced a multimillion-dollar agreement to create a Home Living store. Under this agreement, Amazon.com will receive $145 million from living.com over five years in exchange for being the exclusive Amazon.com Home Living store providing furniture, bedding, home textiles, decorative accessories, tabletop, window treatments, and other related home categories. At the same time, Amazon.com will make an investment in living.com to acquire an 18% stake in the company. Amazon.com also has warrants for another 9%, upon the transaction?s closing. Product Situation ? Auctions, zShops and sotherbys.Amazon.com Amazon.com?s three major marketplaces, Auctions, zShops, and sothebys.Amazon.com surpassed a combined 1 million registered users and 1.5 million active listings, during the fourth quarter. Amazon.com continued to integrate these services with its retail stores to deliver a better overall value and experience for customers. Examples include a partnership with DreamWorks to promote Stuart Little and American Beauty (72 auctions, averaging 27 bids per auction, total gross merchandise sales of over $25,000, yielding an average of over $400 per item).
The Essay on Amazon Case Study: A Major Business Who Buy And Sell Products Online
1.What is Amazon’s business? •Amazon is an e-commerce company/ online retailer. They buy and sell products online. 2.A major business driver that was covered in the case is Operational Excellence. What are some of the information requirements that are associated with the business driver? •Some of the information requirements associated with the business driver are: i.Improvement of information ...
February 3, 2000, Amazon.com announced the availability of e-Poster 2000 for Amazon.com Auctions and zShop sellers. With full functional support for Amazon.com Auctions and zShops, e-Poster 2000, an updated version of the popular auction-listing automation software AuctionPoster98, was officially launched today by AuctionPoster.com, Inc. Amazon.com’s sellers can now download e-Poster 2000 from www.auctionposter.com/amazon for use when creating Amazon.com zShops and Auctions listings. AuctionPoster.com provides software and services to enable online sellers to create online auction, storefront, and classified listings easily, quickly, cost-effectively, and professionally. Auction Poster software and services provide professional results to non-technical business people, empowering a whole new segment of online sellers. AuctionPoster.com provides the tools and support to enable sellers to get superior results. Used by some of the most active online sellers, AuctionPoster.com customers have over 30,000 online auctions running daily on popular online marketplace sites, including Amazon.com. Barnesandnoble.com launched its online business in March 1997 and has become one of the world?s largest web sites and the fourth largest e-commerce retailer, according to Media Metrix.
Their primary target markets include books, music, software, magazines, prints, posters, and related products. The online business has capitalized on the recognized brand value of the Barnes & Noble name to become the second largest, and one of the fastest growing, online distributors of books. Barnesandnoble.com customers can choose from millions of new and out-of-print titles whether it?s the latest bestseller, a university press title, a hard-to find book, or a rare first edition. They also offer thousands of bargain books discounted up to 91%. In addition, Barnesandnoble.com offers the most popular software and magazine titles, as well as gift items for every occasion. In order to help their customer?s searches, Barnesandnoble.com provides book descriptions, reviews, and excerpts for thousands of titles, along with recommendations. They also provide live author chats in their Auditorium exclusively for their monthly readers. The Barnesandnoble.com music store features the first online classical music superstore with 16 categories of music with more than 1,000 subcategories. They also have hundreds of thousands of albums, more than 20,000 artist biographies, and more than 50,000 music reviews and album ratings.
In just one month after launching their music store, Gomez Advisors Inc. ranked it as the second best among ?Overall Online Music Stores?. Some of Barnesandnoble.com?s recent additions to the site are the Prints & Posters Gallery, a unique collection of images that can be produced on demand on museum-quality canvas or high-quality paper. Then there are the e-Cards with a selection of greeting card images that can be personalized and enhanced with animation and music. Borders.com is a sister company to Borders, Inc., an electronic commerce site that has access to nearly 700,000 titles and over 10 million books, music and video items in stock. Borders.com claims to be more than just a premier collection of books, music and video. But a terrific resource to search for specific or collection of titles by an artist or author. Customers can browse hot new titles, essentials, award winners, and best sellers in every subject. An Info Desk is available with experts to help you find that book, CD, or video that you can’t seem to remember the title of, even if you only remember certain descriptions of the item. Borders.com strives to provide a community to share your thoughts on favorite titles, and get to know authors and artists through interviews and features.
In the Netcafe provided, customers can find a schedule of coming events. In addition customers can chat at Talk City or join in Salon Magazine’s Table Review and review the titles that interest them. One of Amazon.com?s top priorities in 1999 was improving its distribution infrastructure. Their plan was to open one or more distribution centers to increase investment and in its existing infrastructure in order to increase efficiency. In doing so, Amazon.com will also increase its on hand inventory. As a result of expanding its distribution network, Amazon.com expects fulfillment costs to increase in 1999 as well as higher costs in the marketing and sales departments. In efforts to gain distribution independence, the decision was to lease an enormous distribution center in Coffeyville, KS. The new center is currently a 460,000 sq. ft. space that will later be converted into 750,000 sq. ft. It will generate about 500 jobs and will house books, CDs, videos and other products. This will double Amazon.com?s existing capacity. It will also mark Amazon.com?s third effort in 18 months to expand its distribution. In 1997, they opened a 200,000 sq. ft. warehouse in New Castle, DE and in 1998 a 320,000 sq.
ft. space in Fernley, NV. Amazon.com has already loosened its dependence on Ingram as its primary source for books. In 1998, Ingram accounted for 40% of its inventory purchases, compared to 60% in 1997. This dependence continued to drop more as Amazon.com continued to acquire more distribution space. This became a definite reality when Amazon.com opened two new warehouses in Kentucky for an additional 1.4 million sq. ft. in distribution capacity. This purchase brought their total space to more than 2.5 million sq. ft, several hundred thousand feet more than Ingram Book Group and nearly double that of Baker & Taylor Books. But Amazon.com does acknowledge that there might be some under-utilization of space as they grow to fill their capacity. ? Amazon.com could build real world stores to allow customers to feel and experience products before making a purchase. ? Amazon.com could take advantage of the growing international markets that have yet to be tapped. ? There are untapped product markets that have strong potential for profitability. ? BarnesandNoble.com, ranked number 2 and Borders.com ranked 4th as online bookseller create competition from the real-world book superstores who are expanding into the “dot com” environment.
? CDNow, a leader in music and MP3.com an Internet retailer of music that receives more than 5 million visitors per month are serious competition from other online web stores who have a dedicated following and are focused on a specific market. ? Fat Brain-Third as an online bookseller ? Wal-Mart- offers everything under one roof ? Amazon.com is in a strong position as market leader as an online retailer. ? Amazon.com continues to demonstrate superb customer service by developing a very loyal customer base. ? The company was a pioneer in E-commerce and has established a strong presence and brand name. ? The inventory management plan used by Amazon.com allows them to function in a ?Just in Time? inventory environment resulting in lower inventory carrying costs. ? Amazon.com is the leading online retailer but has yet to turn a profit. ? There is a possibility that Amazon.com has over positioned themselves in too many target markets. ? Amazon.com?s lack of human capital could hamper support for expanding target markets. ? Distribution strategy that results in the purchase of massive spaces and under-utilizes them can drive operating costs up and reduce cash flow. ? There may be a possible system exposure due to a limited disaster recovery plan that would ensure rapid recovery.
? Produce net profits of $1 million by 2003 ? Achieve a break-even-point by June 2002 ? Bring total expenses to 90% of total revenue after taxes ? Produce an increase of cash flow of 20% by the year 2001 Currently Amazon.com is a publicly traded company operating at a loss. Although Jeffrey Bezos, the President and CEO, believes obtaining market share is more important than turning a profit, it is the opinion of this consulting firm that it is never too soon to make money. Since 1994 Amazon.com has been drastically increasing its gross profit but at the same time, it?s net loss has been triple their profit from 1995 to 1997. In 1998, net loss decreased to only double gross profit. However, in 1999 net loss far exceeded any profit made in that year, decidedly the worst year in the history of the company as far as becoming profitable. For a company of this size, a net profit of $1 million should be viewed as a first step toward financial success. One of the first financial goals of Amazon.com should be to target a break-even point date and adjust expenditures accordingly. This goal will set the pace for the financial departments of Amazon.com to be more responsible in their expenditures.
When news of a targeted break-even point reaches the public, stock value will most likely soar for a short time. If the target date is too far into the future, short-term investors will not be interested and Wall Street analysts may suggest that Amazon.com is dragging their feet or are not capable of making a profit. This would be detrimental to Amazon.com?s image and value. Currently, Amazon.com sells their merchandise at 20% above their cost of goods sold. Some products have more room for a profit margin without looking overpriced. Products that have very low wholesale prices may be the initial targets for increasing the consumer cost. By outsourcing or deploying a Supplier Managed Inventory Program which allows for direct shipment from the original equipment manufacturer helps to drive down inventory costs. With fewer expenses, the prices of each product should be matched with the frequency of sales and priced to surpass expenditures by 20%. Distributing the overhead cost across all product lines with more emphasis on the cheaper products, Amazon.com can make a profit, have competitive low prices, increase stakeholder wealth, and retain and improve their market share. Creating a positive cash flow is very important.
Amazon.com has over $300 million in long term debt that will come due several years in the future. Projecting backward from the 2008 due date of the loans, Amazon.com must have the cash on hand, in the form of profits, to pay them off. To create that level of profit Amazon.com must slowly work their way to that profit level over the course of the next several years. Moving too slowly, Amazon.com won?t have the liquid capital necessary to pay off the loan and moving too quickly will mean higher prices and a quickly thinning customer base. ? Achieve a 200% increase in sales per year for books ? Achieve a 250% increase in sales per year for music ? Achieve a 275% increase in sales per year for movies ? Achieve a 100% increase in sales per year for electronics & software ? Achieve a 350% increase in sales per year for toys and video games ? Achieve a 100% increase in sales per year for home improvement merchandise ? Maintain a 20% markup on books, music, movies, electronics & software, toys and video games, and home improvement merchandise ? Expand consumer awareness of the Amazon.com retailer ? Expand the product venues to include more diverse merchandise ? Expand the distribution channel by increasing the number of suppliers The percentage increase in sales for the above categories were determined by each category?s required strength minus the current strength of that product line all divided by the number of years left on the loan.
This is the percent increase necessary per year for the specific product line to create enough profit to exactly pay off the loan. This chart shows the historical gross profit margin achieved by Amazon.com since its inception in 1994. Since then it has had tremendous growth, now hovering around 20%. This is a good level, both for the company, to create some profit and pay off debts, and their customers who benefit from the low prices. Because 20% is the target for the company, we have shown the desired goal for the years 2000 through 2003. The percentage markup for each category was determined by the markup needed with the category?s required strength to equal the loan amount minus the current markup on the products all divided by the number of years left on the loan. This is the percent markup required per year for the specific product line to create enough profit to exactly pay off the loan. Both the percentage markup and the increase in sales are dependent on each other and therefore there is no requirement that one be a certain value. If the increase in sales is higher than expected, the markup does not have to be as high, and vice versa. For any company to be successful, they have to be known to the public.
Fortunately Amazon.com does not have a low profile. During Christmas last year Amazon.com?s reach climbed to 25.6% and unique visitors grew to 15.9 million surfers. Because of this, Opinion Research Corp rated Amazon.com the number one place to save money on the Internet. Ernst & Young rated Amazon.com the number one shopping destination for 42% of online shoppers during the holiday season. In the area of strengthening relationships with customers, Amazon.com announced that 1999 sales per customer who purchased in 1999 were $116, up from $106 for 1998. Amazon.com also operates two international Web sites: www.amazon.co.uk in the United Kingdom and www.amazon.de in Germany. Amazon.com has even invested heavily in leading Internet retailers that are improving the lives of customers by making shopping easier and more convenient. Some examples are: ? Greenlight.com, the only company that offers car buyers the control of auto purchasing online with ongoing service and support from local dealerships ? Drugstore.com, an online retail and information source for health, beauty, wellness, personal care and pharmacy ? Pets.com, the online leader for pet products, expert information, and services ? HomeGrocer.com, the first fully integrated Internet grocery-shopping and home-delivery service-with operations in Seattle; Portland, Oregon; and Southern California ? Gear.com, which offers brand-name sporting goods at prices from 20 to 90% off retail ? Ashford.com, the leading Internet retailer of luxury and premium products and the Web’s number one retailer of watches and jewelry Amazon.com also runs the Internet Movie Database (www.imdb.com), the Web’s comprehensive and authoritative source of information on more than 150,000 movies and entertainment programs. There was one advertisement shown here and a small footnote at the bottom of the page showing that Amazon.com owned and operated the site. With some controlling interest in popular Web sites, word-of-mouth from users, the ease of communication using e-mail and options such as gift certificates, Amazon.com has created one of the most popular home-shopping sites today. Jeffrey Bezos, the President and CEO of Amazon.com stated that he wants Amazon.com to be the one place a consumer can go to buy absolutely everything. So far Amazon.com only has six different categories of merchandise. Adding more product lines is just a matter of contracting with the manufactures and adding the products to the web site. There is no doubt that this is worth doing, but it is a matter of timing. The initial startup costs and the maintenance of the new pages may need to wait until well after the break-even date. Last year Amazon.com opened five new retail stores around the world and also started its auction site called sothebys.Amazon.com. As recently as 19 months ago, Amazon.com’s U.S. Books business represented 100% of Amazon.com’s sales. Despite huge revenue growth, U.S. Books accounted for less than half of total company sales in the last quarter because customers around the world chose Amazon.com for an increasingly wide array of products. Amazon.com can also increase the number of suppliers to broaden its distribution channel. Amazon.com has already opened web sites in the UK and Germany and they have been rated the number one online retailer and in the top ten most popular sites in their respective countries. With the use of quick delivery services Amazon.com can ship merchandise anywhere in the world, but having more suppliers will reduce the chance of backorders and shipment delays. If a package takes too long to get from the manufacturer to the customer, only Amazon.com looks bad, not the delivery service and not the supplier. Therefore, the broader the base of suppliers in strategically located regions, the better the service is for the customer. This idea is separate from obtaining suppliers for new product lines, but should also be a guideline when new suppliers of new merchandise are acquired. Target Market: Owners of Personal Computers & Shop At Home Consumers When Jeffrey Bezos says he wants a customer to be able to buy anything from one place, he is required to use a virtual store such as Amazon.com because a real world store could never warehouse endless products for millions of people. The target market of Amazon.com is literally anyone who can see the pages and this means people with access to the Internet. The majority of these customers have their own personal computers, but there are students using school computers, professionals that use office computers, and even patrons of Internet bars that can sip a latte and surf the Internet together. Not only is Amazon.com targeting people with the necessary hardware to make Internet shopping possible but Amazon.com is also seeking out the type of person that likes to shop from home. Television channels have been dedicated to marketing towards this type of consumer for years. The QVC (Quality, Value, and Convenience) channel and the HSN (Home Shopping Network) channel are two examples, both of which have an Internet presence. Positioning: A One-Stop Shopping Environment for All Consumer Goods The idea that a customer could buy anything they ever wanted from one place has its appeal. Being able to order groceries for the week, purchase gifts for all the birthdays coming up, window shop for the coolest computer games, and buy the latest action thriller (books or movies) is a couch potato’s dream come true. Unlike an Internet mall where there are specific stores responsible for their specific merchandise, usually unrelated to other stores in the mall, Amazon.com acts as the only store selling everything you want. This distinguishes Amazon.com from Internet portals, a starting point where the consumer bounces in and out of different stores all with their own look and feel, security measures, and privacy statements. With Amazon.com the customer only deals with one owner of the merchandise, one payment system, one secured web site, and one privacy concern. The following chart shows twelve reasons why users choose to shop online. Some of them are complaints about shopping in “Brick & Mortar” stores such as crowds and the limited open hours, but the majorities are improvements in the shopping experience. Always being open for business, a better selection, and price are a few of the advantages of shopping online. Product Line: The Largest Selection of Select Retail Categories Amazon.com seeks to be the world’s most customer-centric company, where customers can find and discover anything they may want to buy online. Amazon.com’s All Product Search scours the Web to help customers find merchandise that is not available at Amazon.com, Amazon.com’s Auctions, or Amazon.com’s zShops, making Amazon.com the shopping destination to find anything. Currently there are only a few types of products available, books, music, toys, electronics, movies, and home improvement items. Branching into other areas such as automotive, apparel, jewelry, office equipment, and recreational merchandise, to name a few, is necessary to achieve Amazon.com’s goal of providing every type of product. Even though someone may want to buy a pack of gum online, Amazon.com needs to decide on boundaries for its product lines to prevent unprofitable maintenance of merchandise rarely purchased online. The harder an item is to find in the real world, the more profitable it would be to sell that product online. The following chart shows the total percent of sales Amazon.com took in for each category last year. For example, Amazon.com had 61.5% of total book sales over the Internet. The order of market share for each category, from highest to lowest, is the same as the order Amazom.Com began selling merchandise in each of the categories. Price: Price at a Low but Profitable Margin The largest part of competition is generally the price of the product. A store that has the lowest price for something whose quality is the same (a name brand product) generally gets the sale. In the virtual marketplace, competition is literally global, forcing Internet businesses to have the lowest price of any other business. Startup Internet retailers often sell their merchandise at or below cost just to get the loyal customer base. Even though customers may buy the products, the retailer will have to eventually raise prices to make enough profit to pay off their loans and to satisfy stakeholders. Amazon.com has had below-cost prices for a long time and this has gained them global recognition, a form of advertising. Soon Amazon.com will have to start acclimating their client base to slightly higher prices and hope all the loyalty they bought pays off. Distribution Outlets: Advertise on the Top Ten Most Popular Web Sites Amazon.com has been rated the number one most popular Internet retailer and that’s a start. There are still nine other Internet sites listed in the top ten (not necessarily retail oriented) that Amazon.com could buy banner advertisement space and promote their retail web site. One group rated www.stockmaster.com as the number one most useful web site this month. The next few were Dialpad.com – making free long distance calls, didyouknow.com – interesting trivia, and dating911.com – getting dating advice and reading about dating disasters. Amazon.com’s Internet Movie Database site made number six and as shown above, there is already an advertisement there. There are a couple of options for obtaining popular advertising space. Amazon.com could buy popular sites and run them any they see fit. This is the case with the Internet Movie Database; a place used long before Amazon.com had popularity. The other option is to rent space or barter services with willing web sites. This is by far the least expensive means of advertising and just as effective. The sales force should only consist of people creating banner advertisements and sales people getting contracts with suppliers and maybe distributors. If Amazon.com chooses to add real person online help for the customers through a chat window, staffing costs could go through the roof. How many people should be hired to support 20 million customers in a timely fashion? However customer support is handled, the sales force has an easy job when word of mouth is doing the work for you. Service: Efficient & Widely Available Service with Fast Turn-Around Every business wants the customer to be happy and every customer wants his or her merchandise cheaply and quickly. This is the ultimate goal of Amazon.com, as well it should be. One example from last Christmas, just before the cutoff deadline an order was placed by a customer at 8:05 p.m. on December 23, left the dock at 1:05 a.m. on December 24, and was delivered to the customer in Honolulu at 3:55 p.m. on December 24. It was a Deluxe Scrabble set. Sales Promotion: Develop an Advertising Campaign to Promote Consumer Awareness, New Products, and Better Distribution Even though a sales pitch says one thing, that doesn?t necessarily mean the product delivers. In the case of Amazon.com, they could advertise that they have the most popular site on the Internet, they have a constantly revolving inventory of products, and the best distribution network on the Internet. Once the consumer gets to the retailer?s site, the same old thing woos them. This is the current strategy of the sales pitch, getting the customer in the door. People go places with no intention of spending money, whether it be in the real world or virtual. So the goal of the marketing department is to get as many people to see the merchandise as possible, even if it means lying to the public. Honesty certainly doesn?t hurt, but it won?t put you on top of your ruthless competitors. Advertising: Decrease Sales Promotion Budget by 10% and Advertise on High Traffic Web Pages, Television, Newspaper, Radio, and New PC Owners Of Amazon.com?s total operating expenses, 54% was dedicated to marketing and sales. Now that Amazon.com is a household name, rated number one retailer in all three countries where they host a site, and rates in the top ten of all Internet sites combined, Amazon.com should ride the momentum and divert some funds to improving the web site. The large majority of Internet users are now aware of Amazon.com and a good number have actually made purchases from Amazon.com. Ten percent of all online purchases were made at Amazon.com for 1999. Having a little extra money to making the web site even better while maintaining the majority of the marketing and sales funds to broaden awareness may make for even happier customers. Adding a feature everyone finds irresistible will catch even more customers through word of mouth compared to a marketing strategy. The above chart shows the potential number of customers from the given countries. This can be used as an indicator for choosing the next target country for Amazon.com’s Internet retail stores. R & D: Develop New Product Lines Such As Apparel, Jewelry, And Automotive Parts To become the one and only place where a consumer needs to go for any item Amazon.com must develop their merchandise portfolio. Apparel, jewelry, automotive parts, office equipment, office furniture, and recreational items are just a few ideas for product lines that are common enough where people buy these products on a daily basis. Researching competitors and their volume of sales over the Internet for products that Amazon.com currently does not offer would be a first step in deciding which product lines to pick up. Beginning with a rough idea about clothing, Amazon.com would research online distributors of various clothing types and possibly start a product line dedicated to the top seller of the most successful competitor. Starting small with what has already proved to be the competitor?s best seller would be a step in the right direction. There is no need to begin a product line that has never been tested before unless there is real proof that it can be made successful. Currently, nearly all products are sold by someone over the Internet and now that Amazon.com is established they can afford to be a little more cautious.
Marketing Research: Monitor Competitors More Closely & Explore Consumer Behavior of Internet Purchases Monitoring the competitors may allow Amazon.com to react in a positive way. Research may indicate that Barnes & Noble Online is debuting a new feature where the customer can hear the description of the book while continuing to look around the web site, Amazon.com could begin to offer the same thing and not lose any customer base over the new feature. If it is believed that the new feature is more costly than beneficial, Amazon.com can wait and see how responsive the customers are before wasting additional funds on the idea. Another example might be Reel.com, a major competitor in movie sales, begins showing short movie clips to further entice would be customers. Again, having not thought of the idea themselves, Amazon.com could jump on the bandwagon and begin offering movie clips or hold back and assess the profit / loss of the idea. The point is that Amazon.com would have a choice to implement the same ideas. Not monitoring competitors closely enough and allowing competitors to steal the customer base away may be the most costly. In an effort to expand the Amazon.com brand name we recommend that Amazon.com become a free e-mail provider. This service will benefit Amazon.com in two primary ways. The first way Amazon.com will benefit is customers that use the service will be forced to pass through Amazon.com?s advertising space when reading or sending their mail. A user will logon to the Internet, go to the Amazon.com home page, where they login and check their e-mail. While they are checking their e-mail, they will see a banner that will display current promotions offered at the web site. Second, with every piece of mail they send Amazon.com can attach a signature encouraging the recipient to visit Amazon.com. As one Internet user sends their e-mail from the Amazon.com mail service they are essentially providing a positive word of mouth advertisement endorsing the retailer.
This feature should be rolled out immediately to existing customers, by allowing them to create an account automatically when they make a purchase. Then the service is expanded to include any user with Internet access in the next six months. Amazon.com’s existing information technology department has already set up an internal e-mail strategy, and can expand these services to focus on external customers as well. There will be a 3MB limit on incoming mailbox size to decrease the cost for storage space. Customers will be limited to keeping messages for no more than thirty days. The cost increase will be minimal, in the $250,000 to $500,000 range, with most of the costs incurred as a one time new hardware purchase for storing e-mail messages. Another way to increase Amazon.com’s name recognition would be to sponsor Internet radio broadcasts. The same way people listed to a regular radio, computer users attached to the Internet can listen to a radio broadcast that comes over the computer. The broadcasts are generally “talk radio” instead of music broadcasts but cover a very wide variety of topics. Sponsors are needed to fund the production of the Internet radio just as in traditional radio. Since Amazon.com’s primary target audience is computer users, we feel this is a niche market under utilized by advertisers even though the total Internet radio market is relatively small. Expand the accessibility of Amazon.com to include people that do not have Internet access, or even a personal computer. Currently Amazon.com?s customers must use a computer that is connected to the Internet to make purchases. This seriously limits its available market reach. To expand this market reach we recommend a three pronged approach that consists of telephone ordering system, building physical stores and allowing dial in access to its online store. Begin by expanding the number of phone operators. This is the easiest of the proposed plans to increase available market share. These people will accept dial up calls from a 1-800 number, and will place orders on the web site for the customers. These operators will be able to interact with the consumer, and can be taken from the same pool of employees that currently offer the customers a 24 hour per day 7 day a week technical support line. This pool of employees will be cross-trained to handle both types of calls (sales and support).
By increasing the number of phone representatives it is possible to alleviate the concerns that first time buyers have regarding real time customer support. The cost to provide this service is approximately $500,000 per year, primarily from the increased headcount required to staff phones. This was figured by employing 24 people for 8 hours, paid at $6.50 per hour for the year. The increase in people will allow for faster and easier customer service calls, as there would be a larger pool of employees trained to handle the incoming call volume. Provide a dial up 1-800 number to an Amazon.com web site that will allow users who do not have Internet access the opportunity to shop online for no additional charge. Once online, the customer will be restricted to Amazon.com?s web space, and not allowed to browse the rest of the Internet. The intent is not to become an Internet service provider, but allow the consumer another means to make purchases at the store. Additional hardware costs will include the purchase of several modem banks to handle the incoming call volume, approximately $1 million. It will be necessary to contract with major PC manufacturers, including Dell, Gateway and HP, to have them put a link on the desktop of all new PC?s that will allow a user easy access to our online store. Finally, to reach the broadest market, it is recommended that real world stores be built. These stores will provide Amazon.com a presence in the off-line environment. These stores will not carry the goods that are available at the online store, but rather provide a portal to which customers can use PC?s provided by Amazon.com to browse the Internet aisle. These ?Click & Mortar? stores will provide PC?s with Internet access in a user-friendly environment, including snacks, beverages and coffee that can be purchased while the user is browsing the web site, similar to the cyber-caf? concept. The shops will have a small footprint, averaging 2,000 sq. ft, and will be located in high foot traffic areas, such as local malls. These shops will also sell Amazon.com specific merchandise, such as T-shirts and coffee cups with the Amazon.com.com logo. These shops will also provide a real world place for consumers to return merchandise. One of the largest complaints of Internet shoppers is the inability to return items to a ?Brick & Mortar? store. This expansion will move Amazon.com in to a ?Click & Mortar? environment, though the initial cost may be high, the expansion can be rolled out within the next 5 to 10 years. The estimated cost is between $10 and $20 million dollars per year, primarily on the purchase of retail space and new employees to run the stores. Amazon.com?s goal is to become the largest online retailer, and needs to continue to introduce new product lines to maintain its impressive growth. To do this, expand the product lines even further to include grocery, apparel, jewelry, auto parts and travel items. To do this they will need to merge and/or acquire several other companies, as well as develop key partnerships with suppliers to provide a greater number of choices to their customers. The first area of expansion should be into the auto parts industry. Develop a partnership with key auto manufacturers including GM, Honda, Toyota and Ford that will allow Amazon.com to track the inventory of their parts. Amazon.com can then develop a page where consumers can search for available auto parts by manufacturer, model and year built. Customers will then be able to purchase factory parts for any car through Amazon.com?s web site. Customers will be able to locate hard to find parts using Amazon.com?s extensive database of parts, and have the parts shipped directly to their home without having to drive all over town in search of them. Another area for expansion is the food or grocery industry. There have been several startup companies, such as Home Grocer that have begun to develop this service. Amazon.com should aggressively pursue the take over of companies and use their knowledge base to expand the product offering on a larger scale. Amazon.com can use its industry leading brand image to exploit this new area of E-commerce. By utilizing the existing resources of the company they acquire to more readily control this new market. Finally the last area that Amazon.com should branch into is the travel industry. The travel industry is one of the hottest fields currently available on the Internet. There are several hundred sites available to Internet users that lists travel specials and packages. However, one of the big complaints by Internet shoppers is that web sites are too difficult to find. By bringing travel services into the Amazon.com home page, it will provide an easier way for consumers to find the deals they are looking for. Again Amazon.com should not create another site from scratch, as this will prove too costly and time consuming. In this stage of Amazon.com?s development, they need to utilize their brand name by partnering with existing travel sites and consolidating their business into Amazon.com.
Amazon.com needs to create strategic alliances with its suppliers and shipping companies. Consumers have emphatically stated that the number one improvement for E-commerce is the price of shipping goods. Consumers are not excited about additional charges that are incurred when purchasing online. To this end, Amazon.com must aggressively pursue cheaper alternatives to delivering its goods and services. Begin by contracting with a greater number of distribution centers in the countries that have the greatest number of people using the Internet.
Having more suppliers also means the customer is less likely to have to wait longer for a popular product purchased online. Book sales for Titanic, after the movie came out, were definitely above average and that caused longer wait times for the customer. Had there been additional suppliers in a more distributed area around the country, customer satisfaction for this product and Amazon.com’s service would have been higher. Consolidated Statements of Operations December 31, December 31, 2001 2000 1999 1998 Net sales $9,000,000 $4,000,000 $1,639,839 $609,819 Cost of sales 7,200,000 3,200,000 1,349,194 476,155 Gross profit 1,800,000 800,000 290,645 133,664 Total operating expenses 2,250,000 1,500,000 896,400 242,719
Loss from operations (450,000) (750,000) (605,755) (109,055) Interest income 100,000 70,000 45,451 14,053
Interest expense (400,000) (240,000) (84,566) (26,639) Net Profit (loss) $(750,000) $(920,000) $(719,968) $(124,546) Amazon.com net sales have grown at or around three hundred percent per year for the last two years. It will be impossible for Amazon.com to maintain this growth rate, and we expect it to approach 225% and maintain this rate for the next several years when our action plans are implemented. After generating a 65% market share in the online book sales category the book business branch of Amazon.com has finally begun to turn a profit. Since this was the first branch of business for Amazon.com, we expect the rest of the product lines to begin turning a profit in the next two to three years, similar to the maturity rate of book sales. For this reason we project that net loss for 2000 will approach $1 billion dollars, and will be the peak of loss rate for Amazon.com. Beginning in 2001, Amazon.com will see net losses drop to $750 million, and continue this trend as each of the product lines become profitable. Continuing at this rate, Amazon.com as a whole will turn its first profit in the summer of 2002.
In an effort to ensure the Amazon.com action plans are providing a substantial benefit and are accomplishing the objectives identified, each plan will be monitored. The global criteria applied to track each action plan?s success includes monitoring the volume of orders, orders over time, random surveying and a specific termination threshold for each action plan.
The name recognition action plan identifies e-mail hosting and sponsoring/advertising on Internet radio stations as methods for increasing name recognition and order generation. The e-mail hosting service use of banners on e-mail accounts provides an immediate location for e-mail users to place orders, and keeps the Amazon.com name in front of potential customers. The banners placed on the e-mail hosting section will link directly to Amazon.com?s ordering sections and order databases. When users place an order through the web site, through the e-mail banner, the order database will track the orders origination from the banner ad. In tandem to the banner ad tracking, the database will record orders generated through the e-mail signature applied systematically to all account users outgoing e-mail messages. These two in-points to the Amazon.com?s ordering system provide generous information on where orders and user interaction with the main site are coming from. Since the system will record order origination real-time in the main Amazon.com database, up to date reporting on order location can be provided to Amazon.com management. The report will be web-based and include information regarding the number of orders generated from individuals using the Amazon.com e-mail hosting and orders generated from e-mail recipients. The target threshold for orders per month generated through this action plan is targeted at 5,000. Based on the low level of investment required to deploy the e-mail hosting and the solution?s availability as an ?out of the box? product from software vendors, 5,000 orders provides an achievable number. In conjunction with the real time recording of order origination, an enhancement to the Amazon.com order page will include a simple questionnaire that polls customers on how they heard about the site. The poll will provide specific selections for customers to select to allow for quick quantification of the data. Management will track orders generated from the e-mail hosting action plan for a 6 month period and if orders do not approach the 5,000 mark or the order survey does not indicate the e-mail was the order catalyst, the e-mail action plan?s viability will be re-evaluated. The second portion of Name Recognition action plan is to sponsor Internet Radiobroadcasts that will be tracked through the order survey and an additional method. The Internet Radiobroadcasts will be run on several of the larger Internet Radio Stations, such as Microsoft?s Radio Station Guide web site. These sites can potentially communicate to an extremely large audience. In order to capture the effectiveness of this communication method, Amazon.com?s order information package will be changed. Currently, Amazon.com includes a package of information with each order. This package includes pamphlets on other services offered and a ?post-it? note pad. A paper survey printed on a post card with pre-paid return postage will be included with the package. The post card will have several short multiple choice questions on the service level the customer received and how they heard about Amazon.com. By using two survey methods (on-line and paper) it provides a greater chance of a customer providing input as to where they heard about the company and allows for better measurement of the name recognition action plans. Since Internet Radio stations are a new service being utilized by Amazon.com, the target orders to be achieved will be 1,000 orders. If in a 6-month time 1,000 orders have not been generated through this name recognition program, the recommendation is to shutdown the Internet radio ad spots. The second action plan is composed of 3 major components, deploy an 800 phone ordering service, offer an Amazon.com ISP for direct dial-in orders and open ?Click & Mortar? stores which provide a comfortable, coffee shop environment while allowing customer to purchase online. The second action plan proposal to increase the target market will be controlled and monitored through the use of a contracted 3rd party company, such as Price Waterhouse. The 3rd party firm will perform random samples in different geographic regions to determine the effectiveness of the 800 service, the ISP offering and the ?Click & Mortar? Amazon.com coffee shops. The objective nature of the 3rd party, performing the market survey then quantifying the survey data with an unbiased and clinical approach, is necessary to manage these initiatives. Though the 800 phone order services is of relatively low cost, the investment to create an ISP function and physical coffee shop stores is highly capital intensive. The monitoring controls for each of the 3 components of this action plan are separated due to the very different nature of each project. The 800-phone service will be measure on a quarterly basis and will be benchmarked against a 2% increase in target market growth. If the 800-phone service fails to broaden the core target market by 5% in 9 months (3 quarters) the service will be evaluated by the corporate management team and a recommendation by the 3rd party survey firm will be considered heavily as to whether the program should continue. Considering the slightly higher investment in the Amazon.com ISP initiative that program will continue for a minimum of 1 year and 6 months with the 3rd party performing sample polls on a quarterly basis. If this particular action plan does not yield a 5% increase in market share then the program will be reviewed for termination. The final component of this action plan, Amazon.com coffee shops will also be surveyed on a quarterly basis but the program will run a minimum of 2 years based on the extremely high entry costs. This particular project represents the greatest opportunity for Amazon.com to capture market share. It provides the firm with the opportunity to compete directly with their ?real-world? competitors (Barns and Noble and Borders Bookstores) and offer services not readily available through the web store, such as item returns. Price Waterhouse?s quarterly survey on market share increases will dedicate a substantial focus to the effectiveness of the ?Click & Mortar? stores. The expected market increase from these stores is to be around 10 to 12%. If the stores do not achieve the estimated percentage increases in a 2-year time, no additional investment will be made and Amazon.com will return to a web-based model only. The third action plan calls for an expansion of product marketing. Though Amazon.com has experience and has successfully branched beyond their initial book offering, the inventory intensive nature of this initiative will require the firm to execute with caution. The success of the automotive parts offering will be measured on several factors. First, the initial success factor will be the number of partnerships the firm can establish with the automotive manufactures. The strong brand awareness and the automotive industry?s acceptance of web technology should allow Amazon.com to create partnerships with at least 2 U.S. domestic, 2 Japanese and 1 European automakers. If the firm is unable to establish this limited offering in a 6-month period the resistance of the automakers may make this project nonviable. With the establishment of the 5 automotive producers, Amazon.com will set an initial year revenue goal of 1.5 million dollars to be fulfilled by automotive products. This is a very low revenue goal, but should be attainable. Management will review order status on a monthly basis to compare and review auto products revenue versus the pervious month. The superstore nature of Amazon.com should allow the company to leverage its other stores in this area. For example, if a customer is looking at books on 1992 Geo Metros, the online site can cross sell by suggesting the customer look at the auto parts offerings. Measurement and control of success in one of the web based food stores will be considered based on Amazon.com?s level on investment in the company. A complete buy out of one of the online grocery stores, which represents a very new market, can be measured by an acceptable operating loss. Since consumers might have some strong reservations of purchasing food versus books online, Amazon.com will have to invest heavily in leveraging its strong online brand name to the online grocer. The online purchases will be monitored for strong cross shopping from Amazon.com?s existing customer base. These customers are already comfortable with online purchases and probably would be willing to try another type of online shop will little incentive. Amazon.com will look for 1 out of ten existing customers to make a purchase of $50 or more at the online grocer. New customers, ones that are not already making purchases from the Amazon.com stores, will be measured against making 20 purchases at $20 each within a 2-year period. Distribution management will be controlled and measured against two key indicators. First, a reduction in on-hand inventories. Amazon.com will review inventory-carrying costs monthly and will attempt to drive costs down by $800,000 in 1 year. The company will pursue this action plan by migrating to a just-in-time inventory management program and a supplier managed inventory program. The just in time program will allow Amazon.com to purchase products from its suppliers on an as needed basis and provided consumers a consolidated shipment (i.e. one package with books, toys, and games).
The second inventory program, supplier managed inventories, will require Amazon.com?s suppliers to own the inventory in Amazon.com?s warehouses without Amazon.com taking ownership of the inventory until the point of sale. An inventory management team will be created and over see the management of the inventory programs on a regular basis. The second, metric for ensuring the success of this action plan is the deployment of a Supplier Managed Inventory deployment team. The team will be chartered to migrate half of the existing Amazon.com suppliers to a supplier managed inventory program or a just-in-time inventory strategy within two years. The team will be measured against the number of supplier migrated each month and then a management review each quarter. The better Amazon.com manages information, the inventory levels or the programs, the fewer inventories the company must manage and own. Turnoffs for Online Shoppers in 1998 Not appropriate for luxury items 26% Guarantee of credit card security 20% * Among those planning to by in 1999
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