Amazon
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School
University of Miami *
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Course
677
Subject
Information Systems
Date
May 3, 2024
Type
Pages
2
Uploaded by Fami36 on coursehero.com
1.
Amazon's entry into bookselling disrupted the traditional retail book supply chain in
several ways:
a.
Disintermediation was one way: Amazon bypassed traditional wholesalers and
directly purchased books from publishers. This disintermediation eliminated the
need for wholesalers in the distribution process, changing the dynamics of how
books reached the market.
b.
Expanded Selection: Traditional brick-and-mortar bookstores were limited by
physical shelf space, leading to a restricted selection of titles. Amazon, however,
leveraged its online platform to offer a vast array of books, including those not
typically found in retail bookstores. This expanded selection challenged the
dominance of traditional book retailers.
c.
Lower Prices: Amazon's online model allowed for lower overhead costs than
physical stores. This cost advantage enabled Amazon to offer competitive pricing
and discounts on books, attracting price-conscious consumers away from
traditional bookstores.
d.
Customer Convenience: By providing an online platform, Amazon offers
unparalleled convenience to customers. They could browse and purchase books
from the comfort of their homes, without the need to visit physical stores. This
convenience factor further eroded the market share of traditional book retailers.
2.
Compare retailers and e-tailers on several dimensions. Who has the advantage of these
dimensions?
a.
Convenience: E-tailers like Amazon excel in convenience, allowing customers to
shop 24/7 from anywhere with an internet connection. Traditional retailers offer
convenience through immediate access to products in-store, but they need more
round-the-clock availability of e-tailers.
b.
Selection: E-tailers typically offer a much broader selection due to their unlimited
virtual shelf space. Amazon, for example, can provide millions of titles across
various categories. Traditional retailers have physical space constraints, limiting
their selection to what can be accommodated in-store.
c.
Price: E-tailers often have the advantage of lower prices due to reduced
overhead costs associated with physical stores. Amazon's online model allows
for competitive pricing and frequent discounts. Traditional retailers may struggle
to match these prices due to higher operating expenses.
d.
Customer Service: E-tailers like Amazon prioritize customer service through
online support, easy returns, and personalized recommendations. Traditional
retailers offer face-to-face interactions with sales representatives, providing
immediate assistance but potentially lacking the depth of online support.
Overall, while both retailers and e-tailers have their strengths, e-tailers, particularly Amazon,
tend to hold the advantage in terms of convenience, selection, and pricing, whereas traditional
retailers may excel in providing personalized customer service and immediate access to
products.
3) Assess benefits/concerns with this acquisition.
Amazon's acquisition of Kiva Systems brought both benefits and concerns:
Benefits:
●
Enhanced Efficiency: Kiva's robotic technology aimed to streamline Amazon's
warehouse operations, improving efficiency in picking, packing, and shipping orders.
This could result in faster order fulfillment and reduced operating costs for Amazon.
●
Innovation: Kiva's advanced robotics represented a significant innovation in warehouse
automation. By integrating this technology, Amazon could stay ahead of competitors and
maintain its position as a leader in e-commerce fulfillment.
●
Job Creation: While some concerns existed about potential job displacement due to
automation, the acquisition was seen as bullish for American jobs by creating
opportunities in robotics manufacturing and maintenance.
Concerns:
●
Integration Challenges: Integrating Kiva's robotic systems into Amazon's infrastructure
posed operational challenges. Ensuring seamless integration without disrupting ongoing
operations required significant investment and expertise.
●
Cost: The reported $775 million acquisition cost raised questions about whether Amazon
paid too much for Kiva Systems. The high price tag prompted scrutiny over the potential
return on investment and the impact on Amazon's financials.
●
Labor Relations: Automation through robotics could lead to job displacement among
warehouse workers. Concerns were raised about Amazon's approach to workforce
management and the potential impact on labor relations.
While Amazon's acquisition of Kiva Systems offered promising benefits in terms of efficiency
and innovation, it also raised valid concerns regarding integration challenges,
cost-effectiveness, and labor implications.
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