Wednesday, September 17, 2014

Amazon’s Inventory Strategy


Yuan Gao
Blog Submission #3

Amazon’s Inventory Strategy

Amazon is leading e-commerce in the market with its ability to sell products in Amazon’s inventory and provide platform for other sellers to list and sell their products. Amazon .com called itself "Earths Biggest Bookstore” because it has been ranked as the best consumer e-business. As its competitors estimate that Amazon.com has the highest percentage of the e-business bookstore. Therefore, Amazon tries to share its information and outsources this area of its business to improve inventory cost and customer service levels. From the inventory management point of view, Amazon can outsource its inventory to reduce its inventory costs and to sell competitor’s products on its site to achieve both managing its customer relationship and sustaining its competitive advantage.

There are couple innovative inventory strategies. First, unlike Wal-Mart stocking the stores with all products fit in the neighborhood market, it is impossible to stock all possible books in the market. Amazon is concentrating more on the quality of the products and the manufacturer or the publisher of the products. It decreased its inventory and developed a distribution infrastructure to provide its customers with the fast delivery from the company directly.

Second, Amazon outsourcing some of it inventories to third parties. It cut cost on operational cost and focused on it core activities. It can contribute more labor and information technologies on its distribution and consumer satisfactory; and of course those two factors are Amazon’s key to success. From the video, one can see how amazon received other’s product, and store in a secure inventory and fast delivery to consumers.

Video: Fulfill by Amazon




Last but not the least, Amazon sell other’s products. Consumer’s can compare the price when running to bookstores like Borders - take out their smart phones and search on amazon.com. This action of comparing price on Amazon.com is becoming a habit for most of people. In fact, this can make huge profit because it cut off advertising cost. In addition, because of Amazon’s good inventory and fast delivery strategy, consumers knew only need to wait two days to get their stuff.

Amazon has this innovative inventory management strategy, however, it seems it only being used in e-commerce field. In healthcare systems, Patients are waiting for weeks to get their appropriate treatment done most of the time. Majority of those waiting time is for ordering appropriate medical supplies. Does fulfilled by Amazon’s inventory strategy can be used in healthcare suppliers? How?

Source:

1.     http://download.portalgaruda.org/article.php?article=58352&val=4378



3 comments:

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