Why is amazon building more warehouses as it grows

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Assignment:

Amazon sells books, music, and many other items over the Internet and is one of the pioneers of online consumer sales. Amazon, based in Seattle, started by filling all orders using books purchased from a distributor in response to customer orders. As it grew, the company added warehouses, allowing it to react more quickly to customer orders. By 2015, Amazon had over 100 locations in the United States and another 100 in the rest of the world. It used the U.S. Postal Service and other package carriers, such as UPS and FedEx, to send products to customers. Outbound shipping-related costs at Amazon in 2015 were over $10 billion. Amazon has continued to expand the set of products that it sells online. Besides books and music, Amazon has added many product categories such as toys, apparel, electronics, jewelry, industrial supplies, grocery items, and shoes. In 2009, one of its largest acquisitions was Zappos, a leader in online shoe sales.

This acquisition added a great deal of product variety: According to the Amazon annual report, this required creating 121,000 product descriptions and uploading more than 2.2 million images to the website. In 2010, another interesting acquisition by Amazon was diapers.com. Unlike Zappos, this acquisition added little variety but considerable shipping volumes. In 2016, Amazon opened its first physical bookstore with plans to open more. By the end of 2016 there were reports that Amazon planned to open small brick-and-mortar stores that would sell produce, milk, meats and other perishable items. Several questions arise concerning how Amazon is structured and the product categories it continues to add:

1. Why is Amazon building more warehouses as it grows? How many warehouses should it have, and where should they be located?

2. Should Amazon stock every product it sells?

3. What advantage can online players derive from setting up a brick-and-mortar location? How should they use the two channels to gain maximum advantage?

4. What advantages and disadvantages does the online channel enjoy in the sale of shoes and diapers relative to a retail store?

5. For what products does the online channel offer the greater advantage relative to retail stores? What characterizes these products?

Reference no: EM133985604

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