,CHAPTER 7,Distribution Strategies,1995-1998 Establishing Amazon.com,1995,7 Jeff Bezos founded Amazon,1995-1998 Establishing Amazon.com,1996-1997 To support the increased traffic and sales ,the company built up its infrastructure and systems. Distribution center capacity grew from 50000 to 285000 square feet. Increased the number of titles held in its DCs to over 200000 at the end of 1997 and reduced promised delivery times on those titles. Major efforts were made in software development to support back-office operations.,1995-1998 Establishing Amazon.com,1998, Amazon expanded its product lines. Nonetheless,with the additional product lines, the inventory turns dropped from 56 in 1997 to 24.8 in 1998.,1999 Building Additional Fulfillment Infrastructure,By late 1998, the company was beginning to face toughter competition from player. So,Amazon started adding new product lines and features at a fast pace.,1999 Building Additional Fulfillment frastructure,To support its transformation and its projected triple-digit growth,Amazon adapted its supply chain and distribution network.,1999 Building Additional Fulfillment frastructure,Just before the Chrismas 1999 season , the new distribution center network was up and running.Amazon delivered more than 99% of its orders in time for Christmas 1999.In the fourth quarter alone of 1999,amazon shipped about 20 million items and acquired more than 2.5million first-time customers.,2000-2002 Optimizing the customer,In early 2000,Wall Street began to put profit pressure on all dotcoms,including amazon s stock price which had reached a record high of $106.49 in Dec.1999.,Fulfillment network,2000-2002 Optimizing the customer,In this context,Jeff Bezos acknowledge the need for profitability and “a stronger focus on operational excellence,which means treating customers right but at lower cost.“,Fulfillment network,2000-2002 Optimizing the customer,Jeff Wilke,the new vice president of operations at amazon,quickly launched several initiatives to reduce costs associated with stocking and shipping goods. Streamlining US Distribution Centers Processes Inventory Costs Delivery Processes,Fulfillment network,2000-2002 Optimizing the customer,By a set of measures, Amazon reduce costs associated with stocking and shipping goods.,Fulfillment network,Amazon.com in Europe,Launching Amazon in the UK and Germany Launching Amazon in France Amazons Chanllenges in Europe Qrganization of Amazon European Subsidiaries Going Forward Assessing the EDN Opportunity,Launching Amazon in the UK and Germany,1998 Amazon.com entered the European market,targeting the two countries-the UK and Germany-that represented both the largest online markets and the largest markets for books in Europe.,Launching Amazon in the UK and Germany,Launching Amazon in France,2000,9,Amazon launched France.,Amazon.com in Europe,At the end of 2000, the international segment of Amazon comprising the UK,German,and the newly launched French and Japan(launched in November 2000)sites reached $381 million in sales, accounting for 13.8% of the companys total revenue.International sales grew 74% in 2001 to reach $661 million, accounting for 21% of sales.,Going Forward,By 2002,international revenues were $1.2 billion (35% of Amazons total revenue). Going forward,Amazon executives in Seattle planned to roll out some product categories and functionalities already available in US.So Amazon Europe needed to build up its infrastructure to support this ambitious vision. Tom Taylor was transferred from Seattle to London to address these issues.,Assessing the EDN Opportunity,Tom Taylor should consider whether Amazon needed three independent distribution centers or could it build a European disreibution network (EDN). Taylor also had to consider the benefits of an EDN, function ,location and the impact of the implementation of the EDN on internal departments.In addition, did the EDN make sense in the context of strong growth? If so, which option should choose? By the end of this chapter, you should be able to adress above issue.,