Amazon.com was founded in 1995 and by the end of the 1990s managed to take over the customer market in the United States and achieve fantastic success. Initially focused on selling books, Amazon functioned following its primary purpose to transform the experience of purchasing books into an easier and more enjoyable online experience relieving the consumers from the need to seek out the items they want and browsing the net because Amazon offered the largest selection and customized approach. The efficiency of Amazon was based on the as-needed strategy, according to which, having over two and a half titles listed on their website, the company only kept about two thousand items in stock.
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The number of orders in the United States started to grow rapidly, and the company’s response to this tendency was to open direct accounts with the publishers and thus increase the effectiveness of their supply chain and distribution strategy. The distribution centers of Amazon, as well as their warehouses, began to expand eventually due to the growing consumer base. The newly established distribution centers were positioned in a way to minimize the dependency of the supply chain on the main supplier. To facilitate an even quicker growth, the company used the “Get Big Fast” strategy, added new product lines, expanded its distribution network adapting its supply chain along the way (Hammond 3).
Moreover, the latest technologies, as well as functions such as RFID and pick-to-light were added for better efficiency. Finally, an option known as the “pick list” (with single-item and multi-item orders) was created that allowed the company to promote the most popular and fastest-selling goods and thus increase their revenue and customer base. All in all, the profit of Amazon increased due to their focus on the optimization of operations and the achievement of higher efficiency along with the efficacious cost-cutting strategies that trained the staff to work faster, ensured the application of the most suitable software, and a series of techniques that allowed Amazon to remain equally effective and responsive to the consumers’ needs during holiday seasons and throughout the rest of the year.
Amazon in Europe
Amazon entered the European market in 1998 starting with German, France, and the UK. Initially, the “Get Big Fast” strategy was applied to strengthen the company’s presence. However, the European market posed a set of challenges that were not typical to that of the United States where the company used to operate previously. In particular, Europe presented a fragmented market due to having several smaller countries that could be treated just like a regional market in the United States; besides, Europe had a variety of different languages and thus the customer support of Amazon had to adopt many native languages of the European consumers and offer 24-hour service; moreover, different countries tended to prefer different types of delivery and payment provision, and as a result, the company had to adjust to the operations that were convenient for each particular region; finally, in Europe, Amazon faced the lack of wholesalers, and in turn, had to form professional relationships with publishers and distributors directly.
Regardless of the efforts of their competitors in Europe (BOL and Barned and Noble websites), Amazon managed to win quite a large customer base in the UK and Germany within the first year (about a million of active clients on the German and British Amazon websites) (Hammond 8). The success in the European markets was achieved due to the understanding of one truth. The leaders of Amazon demonstrated an awareness that regardless of all the cultural differences of their buyers, they all had a set of desires in common – a better service, selection, and convenience; that way, Amazon had a primary objective to satisfy these needs of the consumers taking into consideration their local customs and habits (such as implementing the pay with a check option for the French consumers and establishing deliveries via mail for the German buyers).
The postal carriers played a significant role in Amazon’s adjustment to the European markets as they provided excellent coverage of the regions and helped the company accomplish deliveries of domestic as well as the international level (Hammond 10). The European postal services allowed Amazon to launch its fast deliveries (within one to three days) and cot the operation costs in this area because the price of these services turned out to be much lower than the cost of the deliveries in the United States.
To accomplish all of these changes, Amazon has established a decentralized model powered by three independent subsidiaries (Amazon.de, Amazon.co.uk, and Amazon.fr). Accordingly, the three subsidiaries had each their distribution center (one near Frankfurt, Germany, one near London, the UK, and one near Paris, France). However, the new cost-cutting initiative resulted in the ideas concerning the restructuring of the system running with the help of the three
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