Amazon.com • July 16, 1995 • Jeff Bezos (1964) • AMZN, 63 5/8 (8-3-00), P/E = 0.00!! • For the nine months ended 9/30/99, revenues rose from $357M to $963.8M. Net loss totalled $396.8M, up from $78.1M • Market Cap (8-3-00): 21.3 billion!!
How? • Sell Anything • More customers, lower prices • Easy to find what you want • Reviews (customers’, professionals’) • Membership Club • 1-Click
Amazon.com January 2000 • Projected net loss: US$ 350 million • 750,000 sq ft warehouse at Coffeyville, Kansas: 10% used; 90% for expansion • 3 million sq. ft. total warehouse space at a cost of US$ 200 million around U.S. low- or no-sales-tax states (not traditional warehouses) • Sales could crest US$1 billion • (4-1999):Customer accounts increased by more than 2.2 million during the first quarter to a total of 8.4 million, and repeat customers made up more than 66 percent of orders during the quarter.
Warehouses(Jan. 2000) • Seattle: 93,000 • Fernley, Nev: 332,650 • Grand Forks, N.D.: 130,000 • Coffeyville, Kans.: 750,000 • New Castle, Del.: 202,000 • Campbellsville, Ky.: 770,000 • McDonough, Ga.: 800,000
The Anatomy of an Order • Computer assigns a warehouse where your order will be processed • At the warehouse, a worker will pickup your order at bins (where red lights are on) • Into a crate your order goes riding on miles of conveyor belts; bar codes will be scanned to maintain status • Order is checked at a central point, slide down a chute into a box, coded • Personally gift wrapped if needed • Boxed, taped, weighted & labelled (then goes to either USPS or UPS with large facilities nearby; 200,000 pieces a day at McDonough plant) • Door bell Time (Asia), January 3, 2000
Competitors? • Acquired Exchange.com, which operates rare-book site www.bilbiofind.com and rare-music site www.musicfile.com, and also acquired Alexa.com and Accept.com. • Minority stakes in Drugstore.com, Pets.com, HomeGrocer.com, Gear.com & Della.com (not necessary survivors) • Wal-Mart(article)
Business Perspectives • Direct Marketing versus Indirect Marketing • I make I sell vs I make someone sells • Full Cybermarketing versus Partial Cybermarketing • Amazon.com vs Barnes & Noble • Electronic Distributor versus Electronic Broker • Delivery vs Matching
Business Perspectives • Electronic Store versus Electronic Shopping Mall • Generalized versus Specialized e-Malls/Stores • Proactive versus Reactive towards Cybermarketing • Dell is proactive: using the new channel to contact customers • Global versus Regional Marketing • Sales versus Customer Service
Five Elements of an EC System(Hsu) • Web Server • Applications Server • Database Server • Internal Networking • Internet Connection
B2C e-tailers(Tresse, chapter4) Benefits • Ability to reach a global market (marketspace: critical mass maybe reached quickly) • Reduced marketing and selling expenses (update is easy; no re-printing) • Increased efficiency of operation (specialized personnel) • Ability to target consumers more precisely • Ability to convey more accurate product and availability information
B2C e-tailers • Attracts: advertising, e-coupons, sales, promotions, frequent buyer programs, one-to-one marketing (individualized product announments) • Interact: content development and interactivity • Act: • Order processing (one-click ordering) – shopping cart, order validation and modifications, discounts, cross-selling (this with that), taxes (not applicable), shipping & handling charges, records and receipts
Continued • Act (cont’d) • Payment: Cash, credit/debit cards, check, e-wallets?, currencies? • Fulfillment: how? Logistics? • React: customer service – self help, discussion group, track and trace, multiple-language support.
B2B EC • actual business transactions and connection of organizations • types: selling/buying between business - company sites target other business partners • types: portal sites but for businesses; cybercash, security system integration,… • B2BEC - US$43 billion in 1998; expect to hit US$1.3 trillion by the end of 2003
B2B Models • Supplier-oriented Marketplace: consumers and businesses alike use the same site to complete transactions • www.cisco.com, www.dell.com, www.ibm.com • Buyer-oriented Marketplace : Suppliers come to the site to post bids • Tpn.geis.com • Intermediary-oriented Marketplace • Www.procure.net?
e-Procurement Supply Chain Management
Elements of ERP(p 169) • Sales, Distribution (Order Entry) • Human Resources • Accounting and Financials • Integrated Logistics • Production Planning • Customer/Employee
Enterprise Resource Planning (ERP) • To improve customer order processing • To consolidate and unify business functions such as manufacturing, finance, distribution/logistics, and human resources • To integrate disparate technologies, along with the processes they support, into a common denominator of overall functionality • To create a new foundation on which next-generation applications can be developed • E-Commerce
Example: e-Procurement(chapter nine of A) A typical procurement process: • Identify sellers/vendors • Make a request • Receive approval • Fill up a Purchase Order • Wait for Business/Procurement Office to interface with supplier • Wait for the delivery of products • Receiving report to Business/Procurement Office
e-Procurement Solutions • http://www.buyingchain.com/buying_chain/default.asp • http://www.walker.com/products_services/eprocurement/
Benefits of e-Procurement • Efficiency: “lower procurement costs, faster cycle times, reduced maverick or unauthorized buying, more highly organized information, and tighter integration of the procurement function with key back-office systems” (p234) • Effective: “increased control over the supply chain, proactive management of key procurement data, and higher-quality purchasing decisions within organizations”
Other e-Procurement Solutions • Buy-side: linking the buying party with suppliers and back-office systems • Fire up browser and login • Browser products catalog • Select Products and obtain quotes • Create On-line PO • Get On-line Approval • Send PO to Supplier for fulfillment • Start order tracking and ready for receipt
CU Business Office Browser Quote1 Quote2 Quote3 k j l Approve and Generate P.O. Quote1 Quote2 Quote3 k j l customer
Other e-Procurement Solutions • Sell-side: Vertical product trading community • www.chemdex.com • www.sciquest.com