Amazon.com

Anticipatory Shipping By Joe Farmer, Tyler Laird, Alex Kotz, Dan Tepper

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I. Executive Summary Amazon is major player in the e­commerce business. They have a wide variety of

products that fit the needs of many different lifestyles. They are looked at as a leader in

the ecommerce world and people look and buy from them everyday. They have an

issue sometimes with products not being purchased by them because of the delivery

wait. Amazon should get into anticipatory shipping. This will create same day deliveries

or pick­ups from their customers. Amazon will be able to save a great amount of money

through decreased logistics costs. They also will be able to create greater customer

satisfaction with the same day delivery. The implementation and marketing of this will

greatly help Amazon. Customers will need to understand the concept of anticipatory

shipping and the carriers must also. The relationships and communication will be most

important. Once the customers, Amazon, and the carriers understand their role, it will be

great benefits for all parties involved. This will increase Amazon’s market share and

their sales with present and new customers. The wait for delivery will almost be

eliminated when purchasing from Amazon for certain products.

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A. Internal Environment Amazon’s marketing strategy is based on 6 unique pillars:

1. Freely proffers products and services; be able to efficiently offer our customers just

about service or product they could want.

2. Use a customer­friendly interface; make our website very easily to access and

navigate for customers of all ages.

3. Scale easily from small to large; whether our customer is a single person or a large

business be able to easily work with and accommodate their needs and provide them

with what they looking for.

4. Exploit its affiliate’s products and resources: take advantage of what our affiliate’s

products and resources for example audible.com.

5. Use existing communication systems; use communication systems that are

commonly known and easy to access such as the internet, and telecommunications.

6. Utilize universal behaviors and mentalities;

(http://www.marketingplan.net)

We believe that Amazon is doing a great job of executing their marketing

strategy. They have the largest market share in the online retailing industry and are

constantly buying smaller growing companies to strengthen themselves. They are easily

accessed and are able to ship product all over the world. They have an extremely well

established brand name and loyalty. In regards to pricing they can provide lower than

the market average because they offer the sale of used products. The primary way in

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which customers can save money is signing up for Amazon Prime. Customers who

purchase Amazon Prime receive exclusive discounts, the ability to stream TV shows

and movies, and free two day shipping. One of their biggest successes from their

marketing goals is they use a very customer friendly interface. Their site is extremely

easy to access and navigate leaving the customer feeling comfortable and wanting to

come back and shop. Amazon’s mission statement is “to be Earth’s most

customer­centric company, where customers can find and discover anything they might

want to buy online, and endeavors to offer its customers the lowest possible prices,”

(Amazon.com) Amazon does a great job of living up to this mission statement, they

provide consumers with just about any product under the sun. You can buy everything

from electronics to your groceries. Amazon is dedicated to providing customers with

what they want, when they want it. For example you can instantly stream your favorite tv

shows and movies using Amazon instant video, they provide their customers with

extremely fast shipping, sometimes as fast as same day. Their ultimate goal is to reach

their customers in as many ways as possible, whether its through the Kindle or Amazon

fire tv, they are doing a great job of reaching customers on a variety of platforms.

Amazon currently has an 18.9% market share in the online retailing industry

which is the most in that industry.(ibisworld) They are one of the worlds most know and

valuable brands, according to Forbes magazine Amazon is the 33rd most valuable and

well­known brands. They are also listed in the top 100 companies by fortune. Amazon

has a projected make 56 billion dollars in revenue. (ibisworld)

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Amazon’s resources give them a very strong and sustainable competitive

advantage. They have all the money able to bid and acquire any company of their

choosing. They have become the model for how an online retailer should function and

operate. They are one of the most popular and respected companies in the technology

industry. In their industry they are the most powerful company, they have more

resources than anyone else, that is what will give them and sustainable competitive

advantage for time to come. One of their man resources though is the knowledge,

innovation, and vision of their CEO Jeff Bezos. He is always looking to take Amazon

and its products to the next level, whether it be technologically or just trying to more

efficiently provide products to his customers. He is ahead of the curve and a huge asset

for amazon. Another big resource that gives amazon a major advantage is the culture of

their company. They always put the customer first and are known to provide some of

the best customer service in the world, this keeps customers coming back time after

time which is a nice competitive advantage to have. Potentially Amazon’s biggest

competitive advantage is that they are basically granted a free pass from investors.

Amazon’s investors allow Amazon to maintain a premium evaluation even if they do not

produce equally as strong of profits. Amazon’s stock prices are so high that they

reportedly register 22 times higher than a recent book value of the company.

(www.ibtimes.com)

The customer is always the first priority at Amazon. It says so in the first part of

their mission statement. They take pride in trying to make Amazon the “Earth’s most

customer­centric company”. Amazon is always trying to Innovate to improve the

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customer experience. After reading many reviews of Amazon from glassdoor.com

Amazon is a very pleasent company to work for, it is very fast pace paced and they give

you the oppertunites to build your career and work your way up. They target and

hardworking and independent individuals who want to work multiple projects everyday.

Amazon keeps their focus on the long­term goals they are always trying to come up with

new innovations, and become better than they were in the prior year. Amazon recently

hired Bill Vass former CEO of Liquid Robotics Inc. to join Amazon web services cloud

division.

B. The External Environment

Competition The top two competitors in the e­commerce industry for Amazon.com are Ebay,

in the United Statesand Alibaba globally. Both of these companies are brand

competitors to Amazon, though Ebay does vary from Amazon’s business model in that it

additionally offers auction pricing. In the US market for E­Commerce and Online

Auctioning, Amazon controls 18.9% of the market with EBay its largest competitor at 3%

market share (ibisworld.com). Ebay ended 2013 with approximately 1/5th the total

revenue of Amazon. Ebay and Amazon target the same general sort of customer, that

being bargain hunters wanting to shop online. Though there are distinct differences in

how the consumer is willing to pay and wants to interact with the program. Namely Ebay

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customers prefer to purchase via auction and Amazon prefers a set cost storefront, the

basic needs of both though are the same.The major strengths of Ebay include its

product range, shopper experience, and technology. Ebay’s products are drawn from all

sorts of companies as well as from individuals. Because of this, it has a very large pool

to draw from. Ebay’s superior range also extends to quality. Whereas Amazon pulls

generally from the middle tier relatively equivocal to Walmart quality, Ebay offers both

mid tier and high end products. For example, searching Brooks Brothers, a high end

apparel company, yields 496 results on Ebay and only gives around 40, interspersed

with other brands. Ebay’s advantage in shopper experience comes through its more

involved purchasing through bidding. It is far more interactive with the consumer (Kopp.

Minyanville.com). Their final advantage is in technology particularly with their PayPal

system. Ebay acquired Paypal in 2002 after earlier uses. Paypal offers security and

efficiency to online purchases. Though it can also be used now by Amazon it is far more

complicated to work there than on Ebay. Alibaba is Amazon’s other chief competitor.

Alibaba is an online marketplace centered in China. Though Alibaba is primarily a global

competitor to Amazon, they are making advances into the US market. These include

several smaller subsidiary channels as well as the main storefront’s USA channel.Being

a predominantly Chinese e­retailer are two largest advantages. Being centered in

China it has easy access to a market of potential customers with 560 million internet

users spending on average 20 hours a week online. This is roughly twice the size of the

US online market (Mourdoukoutas. Forbes.com). In fiscal year 2012 Alibaba booked

$170 billion whereas Amazon on booked $74 billion (Loeb. Forbes.com). Though this

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reversed again in 2014, it shows that Alibaba does in fact have the ability to generate

sales superior to Amazon. Being stationed in China, Alibaba has the advantage of being

on good relations with the Chinese government as well as the Chinese people. There

are less political and cultural barriers for them to jump through than Amazon does with

Amazon.cn.

Economic Growth and Stability The general economic trend of the US is growth coming out of the recession.

Though more gradual, the recovery that has been going on for the past 5 years is

expected to continue for the US economy. This mirrors the E­Commerce and Online

Auction Industry. with continuous revenue growth, though slowing from 14.6% in 2012

to 4.3% in 2014 (ibisworld.com). It is anticipated to continue growing though. This is

largely driven by the demand for more online sales amongst the US population. One

driver is the comfort that consumers feel with purchasing online. Though initially many

were hesitant to purchase online it has become a more attractive alternative to brick and

mortar stores. This is especially two segments, electronics and games, 24.5% and

13.8% of the market respectively (ibisworld.com). More people are looking for cheaper

tv’s and other electronics and are turning to the discounts that e­commerce provides.

Games are being driven by both the demand for locally unavailable products as well as

increasing demand for video games. Another driver of industry growth is access to the

internet. This can be seen by both the amount of homes with a personal computer, as

well as the increasing ease of access to the internet. Accessing the internet has gotten

cheaper over the past several years as well as better performance with larger

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bandwidth and stronger connections. The amount of households with a computer has

increased from 67% in 2006 to 81% in 2014 and is expected to continue growing as

technology becomes more and more accessible and technologically adept

demographics age (ibisworld.com). One of the largest drivers though for economic

growth is the increase of disposable income. When there is more disposable income,

consumers are willing to spend more in terms of both quantity and quality. Though this

has fluctuated over the past several years due mainly to public debt and unemployment.

The according to Bureau of Labor Statistics’ 2014 Employment Outlook, the estimate for

the country to have a per capita disposable income of $43,543and is expected to make

minimal growth afterwards (www.bls.gov).

Legal and Regulatory Trends

There are two large legal and regulatory issues in the industry right now,

predominantly in the US. The first which has been going on for several years now is

sales tax, and the second and more recent issue that has arisen is Net Neutrality. The

sales tax issue has to do with the fact that online companies are exempt from sales tax

for out of state purchases. Meaning, the only taxes paid were those that they had a

distribution center in. In the past, the taxes generated were negligible and thus, rarely

reported. This gave the company excess capital (ibisworld.com). Due to the expansive

number of state deficits though, 23 states (Arizona, California, Colorado, Minnesota,

Connecticut, Indiana, North Dakota, Washington, Kansas, Nevada, Pennsylvania, West

Virginia, Kentucky, New Jersey, Tenessee, Wisconsin, Georgia, Massachusetts, North

Carolina, Virginia, and Missouri) have passed laws forcing online retailers to pay sales

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tax. (amazon.com) If these trends continue then this will cause the industry as a whole

and Amazon in particularly to have to charge more from consumers and will decrease

which will affect e­commerce’s status as a cheaper alternative to traditional retail. The

second issue is Net Neutrality. This is a recent issue that focuses on whether or not

some aspects of the internet should be given priority in regards to bandwidth. Many in

the industry, including Amazon support net neutrality. They fear that if restrictions are

passed it would turn the internet into a “pay­for­priority” system where broadband

providers have control over both users and websites (Hu. npr.org). This would cause

the industry to become less effective as well as potentially making it more expensive.

Technological Advancement

The primary technological advancements have to do with accessing the industry.

The most important aspect is improvements to both internet and computing. As

computers become cheaper and even more user friendly they are expected to be seen

in more and more households, giving a larger amount of people access to the industry.

Likewise, faster internet connection encourages industry sales by making the industry

easier to interact with for the average consumer as well as making it fast the brick and

mortar stores. Payment is also a large technological aspect. Consumers demand

secure payment for internet transactions. The more secure the connection, the more

willing consumers are to purchase online. The first major breakthrough in this was

Paypal and it is continuing to lead the industry as the most secure source

(ibisworld.com). Additionally it also makes it far more convenient to purchase having

recently introduced a feature to simply click to purchase, which simplifies the normally

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lengthy ordering process. Also related to convenience are technological advancements

in mobile technology. The Amazon mobile app is one example of this where it allows

consumers to access the industry through their smartphone or tablet, further adding

time and place utility. Other examples include Twitter and Pinterest beginning to feature

‘click­to­buy’ features.

Sociocultural Trends

The most relevant sociocultural aspects of the industry are age, disposable

income, changing demand in segments, and increased demand in value added

services. The largest age group that purchases online is the 31­44 year olds who make

up 23.1% of the market. They tend to have the steadiest supply of income amongst the

segments and a high demand time utility as well as generally bargain hunting.

Additionally the second largest is 45­54 years old with 21.8% of the market. Becoming

empty­nesters they tend to have a large supply of disposable income as well as an

increasing demand for convenience and a high likeliness to renovate their homes which

drives furniture sales in the industry. The largest growth potential is the 66+ segment as

it is anticipated that computes will become even more accessible for them, bringing

them into the category of ‘laggards.’ The industry is also about to see a shift with the

digital natives and gen­x members in the 18­30 demographic moving up to a point

where they will have more disposable and steady income (ibisworld.com). The demand

charges have caused a decrease in online clothing sales where consumers prefer to try

on clothes before purchasing. The industry is also seeing a higher demand for

value­added services. Namely these are access to higher quality products as well as

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after sale services. After sale services include tracking of shipments, free shipping

(which is already widely adopted throughout the industry), multiple shopping platforms,

and warranty services (ibisworld.com).

C. The Customer Environment As of now Amazon is serving any age demographic. That is a strong suit of

theirs, they have an array of products that any demographic may be looking for. They

make available even the smallest niches that people are searching for. Therefore with

no age limitations, they are able to serve all ages with their products. Amazon is able to

ship products to the following countries, Argentina, Australia, Austria, Bahrain, Belgium,

Bermuda, Brazil, Bulgaria, Canada, Chile, China, Colombia, Costa Rica, Cyprus, Czech

Republic, Denmark, Ecuador, Egypt, Estonia, Finland, France, Germany, Greece,

Guadeloupe, Hong Kong, Hungary, Iceland, India, Indonesia, Ireland, Israel, Italy,

Japan, Jordan, Kazakhastan, Kenya, Kuwait, Latvia, Liechtenstein, Lithuania,

Luxembourg, Malaysia, Malta, Mexico, Monaco, Netherlands, New Zealand, Nigeria,

Norway, Oman, Panama, Peru, Philippines, Portugal, Poland, Qatar, Romania, Russia,

Saudi Arabia, Serbia, Singapore, Slovakia, Slovenia, South Africa, South Korea, Spain,

Sweden, Switzerland, Taiwan, Thailand, Trinidad & Tobago, United Arab Emirates,

United Kingdom, Uruguay, Venezuela (Amazon.com). They can deliver their products to

any of these countries. While not every product is available in every country due to

some regulatory issues. Amazon is able to serve any kind of psychographic that there is

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in society today. Amazon has a massive array of products that just about anyone would

be able to use. Whether someone is into athletics, computers, clothing, food, and just

about anything else, Amazon is able to deliver products to specific lifestyles. This is a

strength of theirs because they are able to serve to any lifestyle along with many

options for each lifestyle. Lastly, product usage is contingent on each consumer. A

person could be buying a gift and having it shipped directly to the recipient of the gift.

People may have their good shipped to their home for immediate usage. It is not always

that the person buying the item is the same person who will be using the product. Also,

depending on the product the usage of the good will be different. Such as food and

clothing which are both available on Amazon, both of those goods will be used and

stored differently. There are many goods from Amazon that are used in many different

way. There is not any kind of standard usage for the products available through

Amazon.

As for Amazon in the future, they will continue to be able to serve any

demographic. From kids clothes and toys to sewing equipment for any grandma. There

will be no gaps as for products for any age. Geographically is where Amazon is looking

to expand. They are trying to get into more and more countries. They have to deal with

different regulations from country to country. They will also have to acclimate to the

culture in each country which will take research and some time. They may not be

accepted in certain countries, many of the people already are loyal to certain companies

that they shop at. As for psychographic in the future, they will continue to lengthen their

products per lifestyle. They already have products for basically any lifestyle. So, they

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will expand the product lines and look into more products that could be used for different

lifestyles. Lastly, the product usage will stay the same. They will look for different ways

to deliver the goods to each customer, but they are not really focused on creating new

ways to use their products.

Purchasers have to have some kind of cash carrying card to buy from Amazon.

This is the only way whether it be a gift card, credit card, or anything like those but the

purchaser needs one in order to buy products from Amazon. The users will vary

depending on the situation. Because of the mandatory shipping, gifts can be sent, the

purchaser may use the item themselves and they may just be purchasing for a friend.

The purchaser is not always the end user anyway. It depends on what the customer is

doing with the item. Influencers can be anybody since Amazon carries other brands and

many products. They can come from family, friends, reviews, ads, and many more.

People usually go to Amazon because of the prices and delivery options. They are

known for low prices and quick delivery. Along with the free delivery with the Prime

membership, there are not many companies that can offer that promotion. The

customer service is another aspect that gets around by word­of­mouth. They are quick

to respond and cater to anytime a customer needs help. They also deal with problems

with shipping and products quickly and respectfully. They are there to be at the

customers service and Amazon succeeds in this area.

What do customers do with the firms products?

Amazon delivers pretty much any good that a customer can think of. Things such

as entertainment events and transportation vehicles are not available, any other need

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can solved on Amazon. Food, beverages, clothing, technology, education materials,

and so on can all be found on Amazon. They offer thousands and thousands of

products to fill the needs of millions of customers. Customers can only shop through

Amazon at their e­commerce website. They do not have any physical stores to look

around or shop at. Purchasing the products at Amazon has to be done with some sort of

cash carrying card. There are no physical places to use cash to purchase the product.

Their products are mostly offered as single solutions. They may have deals with some

technologies as packages sometimes but for the majority the products solve single

needs. Amazons goods are consumed in a variety of ways. They have thousands of

different products which all have different ways to consume the product. There is no sort

of standard usage for all of their products. The highest peak for Amazons consumption

is during their fourth quarter which ends on December 31 of each year (Amazon, Annual

Report). This is because of the holiday season that is going on in many different

countries. As far as any issues with disposition of their products, it mainly has to do with

the packaging. From product to product there are different issues with disposing of the

product. Amazon ships everything, so the package the good comes in and the extra

packaging included. Mainly goods are shipped in cardboard boxes which are recyclable.

Then for some products they have to add air to the package and use plastic bags

contained with air. The plastic can be recycled but consumers may have to recycle the

plastic separately.

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Where do customers purchase the firm’s products?

Amazon is only an ecommerce store, there are no physical stores where

customers can go in. The website is the only way to purchase Amazon products. The

Kindle and Fire TV can be purchased at Best Buy’s. Any other product can only be

purchased on their website which will require delivery. One of Amazons strengths is

their price and free shipping with their Prime membership. This causes many people to

go look around in actual stores for the products they want. Then they go home and

usually purchase from Amazon. This is their main way that they can get away with not

having a physical storefront. Many of their products can be purchased at physical stores

but the price is sometimes higher. Some people like to look at the good before purchase

and so they go to the local store and gander around. Then decide and then go to

Amazon.com.

When do customers purchase the firm’s products?

Amazon is at their most busy during their fourth quarter, which ends on

December 31 each year. This is because of the holiday season that is occurring in

many different countries during December. None of the quarters really come close to

their last quarter for sales (Amazon, Annual Report). Amazons biggest promotion is

their Prime membership. This offers quick purchasing and free shipping. This promotion

does increase sales for Amazon. The free shipping and good prices that are offered are

what cause many people to shop on Amazon. They do go through season changes

which will affect sales on some items. But, since they have an international presence,

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they are able to contrast that issue with having different countries be in different

seasons. Some geographic regions will have less impact on their sales but will still

make sales with different seasonal items. Along with the seasonal issues, winter

sometimes is too cold for some people to even want to go out. Which is where Amazon

comes in, they offer shipping and can even be next day shipping in some cases. This

allows people who do not want to go out in the weather and shop to shop from inside

their home. Since they offer a wide array of items, people can get all their shopping

done on Amazon in the comfort of their home. Another uncontrollable issue is time.

Amazon is international so there will be lag in the availability to make sales at any time.

What also helps this is that they are only an ecommerce site. Which is open all of the

time. They can have sales come in at all times of the day. Amazon does not have a

physical store so no physical surroundings will be an issue ever. Their social

surrounding will matter with different products they carry. If there are social issues with

products, Amazon would not hesitate to get rid of the product. As far as competitive

activities, many stores are worried about Amazon. They have good pricing, delivery,

and options for almost anyone. Companies are now getting on Amazon to sell their

products. This is because they were getting less money from Amazon buying their

products then selling it to another consumer. This way companies will get higher

margins even though consumers are using Amazon as a way to get their product.

Why and how do customers select the firms products?

There are many people who do not like to go out and shop. They also like to get

all their shopping done at one place. That is where Amazon succeeds, they are only on

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the internet and have a wide variety of products. They are a one­stop shop when it

comes to ecommerce websites. Then for the people who do like to see the product

before they purchase it, they usually go to a store look at it and then purchase it on

Amazon. This is because of their low costs and variety of items. They also offer free

shipping with their Prime membership and offer fast delivery. If a consumer needs the

good now or less than 24 hours, then the consumer will not choose Amazon. If the

product can arrive in a couple days or a little more than 24 hours, then people will

choose Amazon. They just have really good pricing on many items and it is easy

purchasing. Amazon offers one­click purchases which takes away from the time spent

filling out forms on other ecommerce sites. Amazon makes it the easiest to purchase

from their online store and offers the best shipping options. Amazon also has great

customer service, they are constantly focused on the customer. With many different

lifestyles that people live, they try to cater to each one. They listen to the customers with

what kind of products they carry and they deal with customers with all around purchase

activities. Consumers can go on Amazon.com and tell them to call at a certain time and

they will. They are consistently helping customers with issues and anything else. They

are easy to get ahold of and cater to whatever time a customer may need help at.

Amazons brand is very strong as for the moment. People love their pricing, quality,

quick response, and customer service. That is why people are willing to go out and look

at a product then purchase it from their phone or home on Amazon. Other companies

were having an issue with this, so if you cant beat ‘em, you should probably join ‘em.

Companies are not setting up their own accounts to sell their products on Amazon.

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Amazon still gets a cut of the sale and the company can still keep some of their

customers. Commoditization actually is in favor of Amazon. This is because it is easy to

compare prices, specs, quality, and reviews all on Amazon. They sell many

commodities and they can be explored and compared all on Amazon. Going into a store

and doing this is much harder and only available during specific times. Amazon is

whenever a consumer has time, they can compare any product to others.

Why do potential customers not purchase the firm’s products?

People not purchase from Amazon for a couple different reason. First, they may

need the product that moment or in less than 24 hours. Some products can be shipped

next day but not all of them can be. There is also extra shipping fees involved with quick

delivery. So, if a consumer needs the product now or close to that then they will have to

go to a store. Another reason, is because people like to buy products from physical

stores. Amazon does not have any physical stores so they can not compete in the

market where people would rather go into a physical store. Also, not everyone feels

safe giving their credit card or debit card number over the internet. There has been

some security breaches with card numbers for some stores recently. Some people may

not like to do that and only use cash. So, they cannot use Amazon and may not want to

anyway. Amazons pricing is never really an issue with products because they are

usually cheaper or are competitive with their pricing. They also have a large variety of

products that can be purchased and it is rare to not find what you are looking for on

Amazon. They really are a one­stop shop and not having an item is usually not why

people do not shop at Amazon. Lastly, people may be brand loyal to certain companies

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and not want to give Amazon that business. This is not for every item in a persons life

that they may need. But, for some items they may want to purchase directly from the

company. Now, with companies setting up accounts on Amazon, they are trying to lower

the switching cost of those customers. People can purchase some items from the same

company but just on Amazon. Not every company is doing this but this is a way for

Amazon to lower the switching cost for some brand loyal people. Amazon also does not

carry everything. There may be products or brands that a customer is looking for in

particular. If Amazon does not have the product or brand, the consumer will go

elsewhere to make their purchase.

IV. SWOT analysis

Amazon has been operating at a high level since 1994 when it was founded.

They have been able to accomplish this due to their ability to beat the competition with

their strengths. From when it opened to this very day Amazon has changed the way we

research and purchase goods. The first and most important strength that Amazon has

over their industry is a well­developed website with a very user friendly interface. Many

retailers lack in their ability to show their products to consumers over the internet. A

very clear and organized layout allows users to comfortably browse products, create

wish lists, and update shopping cart. Such a simple design allows for less tech savvy

and older consumers to use the site. When a customer is searching the web or a retail

website for a product; a cluttered page can make the experience so much more difficult.

Customers don’t want pop up ads or videos playing that ultimately slow down the

search process. Amazon does a great job at making their website fast, reliable, and

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easy to use. Another strength that Amazon has is its innovations in service. Amazon

Prime has become the flagship service for Amazon and puts it in the same market as

Netflix and Hulu. They have recently coupled Amazon Prime and their new Amazon

Fire Phone. Unlike many companies these days Amazon is staying up to date with its

customers and giving them more and more reasons to shop there. Since Amazon is

only an online retailer they decided to upgrade their online presence to try and make it

an online forum for daily activity. The idea is to make the website fully functional so

there is no need to leave. No other company in the industry has been able to emulate

Amazons recent market strategies in the smartphone, media streaming, and publishing

industry. Since they are the only company offering all of these services they can bring a

greater value to the customer and continue to improve quality. The final strength that

Amazon has built up over the years is their well established brand name and loyalty.

Even being a relatively new company is not slowing Amazon down in their quest for

market dominance. The recognizable “A” logo is known for being synonymous with

online shopping. It has become increasingly popular to research products at a physical

location and then purchase the same product through Amazon due to lower prices and

fast shipping. Customers time and time again flock to Amazon because they know and

love the brand. Other sites fail to separate themselves enough from Amazon. These

Strengths have given Amazon a major advantage over physical retailers, but these brick

and stone store fronts have their own advantages.

Since there are no physical Amazon locations to shop at they have a

strictly online presence and focus. This is a major weakness for Amazon because it

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immediately makes their products unavailable to anyone without internet or a stable

connection. We also have to consider that while people may have access to the

internet people still need to rely on a stable uninterrupted connection. This puts limits

on people's ability to purchase products. Others in the industry not only have an online

presence, but physical locations as well so they can put focus on both and the customer

can choose which medium they want to use. Another weakness that Amazon faces is

the limited availability of its products around the world. There are certain restrictions on

what products you can ship to what countries and this also limits certain availability for

customers. It can be very frustrating to be about to purchase a product and then be

informed because of your location that you cannot receive the product. Other

companies don’t have this issue because they only have store locations where they sell

all of their products. While this does not hurt Amazon that much it does provide a need

for them to expand their product reach. The final weakness we uncovered on Amazon

is their reliance on outside shipping. FedEx, UPS, and DHL all ship products for

Amazon and they are taking a cut of the profit for this. If Amazon were able to use their

own in house shipping they would be able to control the whole purchase and not need

to pass profit on to a third party shipper. While this is a possible weakness for Amazon it

would be an enormous overhaul to correct. Amazon would incur huge expenses by

creating their own shipping fleet and expanding their employee base. Right now this

weakness is not effecting Amazon due to there not being many retailers that have their

own private shipping. Many other companies in the industry are the same and still use

outside shipping, but more test programs are showing the need for a private shipping

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company. These weaknesses are just slowing down the progress that Amazon has

made over the past few years. With their current direction Amazon looks to take

advantage of the new opportunities in the industry.

Online Marketplaces are all the rage these days and account for over half of all

internet traffic. Amazon has recently revamped and outfitted its online marketplace,

Amazon Prime. This market place combines all types of media including movie,

television, music, and literature under one roof. Amazon has seen the type of traffic

Netflix is getting with just movies and TV so they decided to combine that type of

atmosphere with that of the ITunes store. This hybrid market place has a large

selection and has been praised for its speed and reliability. This is the most diverse

marketplace so it is ahead of many competitors and as it expands and more innovations

are added it will help Amazon stay competitive in both industries. The final opportunity

that I found for Amazon is its new and expanding Market segments. While most things

sold on Amazon are made by other companies they have started to roll out their own

products and features that are exclusively sold on the website. Example of these new

segments would be the Fire phone, book rental store, and the media library. These

services are available to members only and provide a whole new experience to the

user. Those who use Amazon will want to purchase these products because they

unlock so much more uses for amazon than just shopping. Competitors are simply

trying to catch up to the appearance and use of Amazons website they are nowhere

close to the same type of functionality. This paints Amazon as the clear favorite for

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online shopping and media hub. While these opportunities provide a bright future for

Amazon they will still need to avoid and contend with some threats in the industry.

Amazon is trying to emerge in some very competitive markets including

the smartphone market. This industry is routinely dominated by Samsung and Apple

who have the major claim on the market share. Many people are die hard brand lovers

when it comes to cellphones and would not switch easily. Amazon has a hard road

ahead of them to drum up interest in their first generation smart phone that doesn’t

seem to add enough to make it worth switching. In the short term Amazon needs to

show the value of the product over its competitors better and outline the unique

features. Over the long term Amazon is going to need to develop services that will

enhance their phone over the competition. Without growing their phone network they

will be unable to sustain the product and it will fail. The next threat that is starting to

worry Amazon is the improvement of many brick and mortar retailers’ websites. This

has been the clear advantage Amazon has had since they opened and they are starting

to lose it. Companies are seeing the need for pretty web pages that are as functional

and easy to use as a cell phone. In the short term Amazon just needs to keep providing

the great deals that it has and attract more customers, but in the long term Amazon

needs to innovate to make the process of buying their products even simpler. Simplicity

is the name of the game and the consumer wants to do as little work as possible when

buying products online. The final Threat that Amazon is facing is probably the hardest

to forecast and this is the inevitable opening of new and cheap online retailers. Many

new online retailers open every year; some fail and some are able to hang on. These

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retailers often make a big splash by offering major deals on products. This threatens

Amazon because the reasonable prices are the main reason people look at Amazon to

begin with. In the short term it would be smart to try and match their deals and force

them out of the market, but if that is unsuccessful then in the long term if they remain

popular it may be in the best interests to purchase their organization and add on to

Amazons holdings.

Amazon has the blessing of being a giant in a relatively new and growing

industry. It will be interesting to see moving forward how Amazon will increase its

market offering to the consumer while still staying competitive in their new market

segments. Either way I believe that Amazon has put them in the position to succeed in

their new endeavors. It is important they remember how they became the giant they are

so they can continue to provide excellent service to their customers.

Strengths:

∙ Well established brand name and a

strong brand loyalty

∙ Innovations in current service

∙ Increasingly user friendly interface

and well developed website

Opportunities:

∙ Online marketplaces have become

more and more prevalent when

purchasing media and syncing that with

other mobile devices

∙ New and expanding market

segments

Weaknesses:

∙ Mainly online focus and presence

Threats:

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∙ Limited availability depending on

location

∙ Brick and mortar retailers that have

begun to improve their online presence.

∙ Expanding into very competitive

smartphone industry

∙ New online marketplaces are

always popping up with new products

and great prices.

Second Half:

F. Developing Competitive Advantages – Value

propositions

Amazon is leading the way with online Innovation in their media center. They have

seen the opportunity to reach an even greater audience by improving and expanding

online services. Not only is Amazon.com used for retail shopping, but also as a

complete syncable media center. With Amazons strong customer loyalty tree with

Amazon Prime they have the unique opportunity to create a one stop online experience.

This would include services such as music, literature, movies, television, retail

26

shopping, and soon to come grocery shopping. Amazons user friendly interface as well

as a plethora of media choices, only rivaled by Netflix, will bring in new customers. It

seems as though Amazon understands their value to the customer and are focusing

their innovations as such.

One such Innovation that is being used to eliminate weakness is Amazon’s

Anticipatory shipping. This program is designed to analyze new and existing customer

data to anticipate product needs in certain geographic areas. Eventually Amazon is

hoping to cut shipping times down to overnight or even same day delivery. Amazon

understands one of their main weaknesses is their only online focus which takes away

from customers who want to see and touch their products before they purchase them.

By decreasing shipping time Amazon is hoping to bring a convenience factor to the

purchase decision. If you only had to wait till the next day would that make you more

likely to purchase product online? Is it because you don't want to go to the store?

Amazon sees that people are busy and are constantly battling with what to spend their

time on. If Amazon can not only house all media, but also shopping under one roof,

then they will be the most convenient retailer for customers.

The most troubling area for Amazon seems to be their threats. While Amazon

has done a great job staying competitive in the online retail industry, there are always

new websites popping up offering great deals. Amazon has been able to stem their

advance so far by relying on their infamous brand name. When purchasing online,

people are extra careful and are very weary when using untried sites or sellers. When

Amazon is involved you can feel safe that your product will come and there is no scam.

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The next threat Amazon has been dealing with is the reemergence of the online

marketplace. Brick and mortar retailers are starting to realize that with all else held

constant, price is the main decision maker in purchasing from one brand over another.

Amazon has worked tirelessly to create extra value to its customers and stay ahead of

its retail competitors.

Amazon has done a great job adapting to the new climate in the retail industry.

While they have done a lot of work innovating for their customers there seems to be one

project in particular that Amazon has failed at. Amazons Fires Phone has been a

disaster since its release. It was the last smartphone to be released before the end of

the year and was by far the least compelling. The products main feature was the ability

to purchase off the Amazon marketplace straight from your phone. Seeing that all

phones have access to the internet and third party apps this feature seems obsolete.

This threat will shape how Amazon moves forward with their hardware. We believe that

once Amazon reverts back to what they excel in they will regain some of the ground

lost. Overall Amazon has done an amazing job in limiting weaknesses and threats and

exceeding in opportunities and strengths.

G. Developing a Strategic Focus

The overall strategic focus of the marketing plan is Diversification. This plan is

used in situations with many internal strengths and many external threats. There were

two focuses we could have used, but in the end diversification was the most

appropriate. Aggressive was the other focus we could have used, but we agreed that

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the threats facing Amazon were more compelling than the opportunites. Amazon has a

great deal to offer the consumer, but external factors are weakening its ability to be

aggressive. Amazon must use its marketing strategy to diversify its portfolio and

product/service selection. This strategy shows Amazon is serious about maintaining

its great relationship with its customers.

V. Marketing Goals and Objectives

A. Marketing Goal A: To provide the world’s most innovative and customer

friendly shipping system.

Objective A1: Anticipate, package, and ship orders before they are

physically placed.

Specific and measurable outcome: Record total number of

orders that were successfully placed and delivered using the Anticipatory shipping

method. Review orders that were unsuccessful in which either order was not placed or

product had to sit in shipping hub for an extended amount of time. Have 20% more full

truckloads of product being shipped within two years. Increase shipments by 15% within

one year. Have less than 10% of defects with anticipated shipping (correctly ship the

right products) within the first two years.

Time frame: we want to reach this objective within the first 1­2

years of implementing the program.

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Responsible unit/person: logistics would be responsible for all

shipping and we would need to create a whole division dedication to anticipatory

shipping.

Objective A2: Lower logistics costs.

Specific and measurable outcome: Track and record total

logistics costs over the first year that the anticipatory shipping program is in place, then

make decisions on how to reduce the costs. Reduce total logistics by up to 15% in year

one. Decrease less­than­truckloads by 20% within the first two years. Decrease miles of

transportation by 20% within the first two years.

Time frame: Lower total cost in first 1­2 years

Responsible unit/person: Logistics division

Objective A3: Dissuade customers from entering a physical store.

Specific and measurable outcome: Track shopping trends for

everyday items to determine whether or not customers are actually primarily shopping

via amazon. Increase sales by 10% within the first year. Increase amount of products

that can be picked up same day or delivered same day by 15% in the first year.

Increase amount of new Amazon customers by 10% within the first two years.

Time frame: we want to reach this objective within the first 1­2

years of implementing the program.

Responsible unit/person: Marketing divisions to spread the word

about anticipatory shipping, and logistics to deliver the goods on time.

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VI. Marketing Strategies

A. Primary Target and marketing Mix

Amazon offers its products to many different sorts of people. The service and products

that they provide are applicable to many different segments. According to a report from

the Portland Business Journal, Amazon does not sell to a particular segment, instead it

sells to the individual consumer. Amazon does not try and group people into large

markets by demographics or geographics, instead it uses buyer behavior. Any user for

Amazon enters information into the site about what products they search for, how long

they stay on one page, what they put into the shopping cart, what they end up buying,

how old the are, when they purchase, and where the product is going. All of this

information is compiled and sorted and compared to similar purchases from other

buyers. This can be seen at the bottom of the page in a tab titled, “customers who

bought this also bought…” (amazon.com). This allows Amazon to cater to the individual

based on applicable and reliable information from past purchases and behavior.

Just because Amazon doesn’t focus their marketing on a particular segment does not

mean though that they do not have a target market. The primary users of Amazon are

between the ages of 30 and 54, this makes up 44.9% of the market (ibisworld.com).

These consumers tend to be tech literate, have families that they provide for, more

disposable income, a wide range of needs, and little time.

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B. Product

Amazon’s main product is providing the service of a retailer. The company’s mission

statement is to, “to be Earth’s most customer­centric company, where customers can

find and discover anything they might want to buy online, and endeavors to offer its

customers the lowest possible prices” (www.amazon.com). To this end, the company

puts a large focus on reliability, low prices, and customer service. These focuses

translate into a product with high place, time, and possession utility. Place utility is

defined as, “being available wherever customers want them” (Ferrell. 14), Amazon

specializes in providing place utility, namely by being an online retailer. The consumer

only needs an internet connection to go shopping rather than actually having to go to a

physical location so it is available wherever the consumer happens to be. The delivery

aspect of the ordered goods also helps Amazon to provide place utility as the ordered

items are delivered to the residence of the customer so that they never have to leave

their home to get what they ordered. Other than the nature of e­commerce, Amazon

provides place utility through some of its products as well. The Kindle and Fire both

increase place utility by giving consumers a mobile platform to purchase off of. The

nature of e­commerce can though, have a negative effect on time utility. Namely

because the product is not immediately available, instead the consumer must wait for

the order to be processed and then shipped to them. Customers can pay more for

shipping to increase the time utility and Amazon is developing predictive shipping to

increase time utility where orders can be accurately predicted and moved close to the

customer to minimize time spent waiting. Other methods of satisfying time utility are

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more relevant to their digital products like their digital library of books and movies. This

is because once purchased, they can be immediately used, especially when off of one

of the several Amazon devices like the Kindle or the Fire. Amazon provides their

customers with psychological utility several different ways. Possession utility is gained

when the products “are more satisfying to acquire” (Ferrell, 14). This is generally done

through ways of purchasing the product. In the case of Amazon, they accept all major

cards, have a credit program, take Paypal, Amazon gift cards, or even Amazon points.

All of these make it easier for consumers to purchase from Amazon. With the

introduction of Amazon Prime, it also includes the addition of free shipping to Prime

members.

Amazon pursues product positioning strategy congruent with its mission

statement. It seeks to be highly customer focused, provide a large selection of goods,

and make it all affordable. Amazon tries to improve their positioning by increasing

customer loyalty which is not without its difficulties. In the industry substitutes are

increasing as more and more traditionally brick and mortar stores allow sales on their

websites. In this way, traditional retailers offer substitutes both with their physical stores

and their online storefronts. Existing solely in the ecommerce industry, Amazon has

e­bay as its closest competitor, targeting similar customers with similar needs. Amazons

digital sales of videos and streaming encounter industry substitutes in The Apple Store

which sells digital media, through streaming sites such as Netflix or Hulu, as well as the

numerous music download sites. In general, large scale retailers are in a sort of

commodity hell where their product of a large, low price storefront. Target, Walmart, and

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Amazon all try to offer consumers the same sort of service and are having to compete

on who can provide at the lowest price. Amazon though continually tries to build

customer loyalty and move closer to a ‘lost for good’ model. They do this primarily by

increasing the value of the relationship to the customer. Some of their methods for this

include: Customer database (recommendations), compatible and complementary

devices (kindle, Fire, prime).

Amazon also benefits from its branding including its brand equity, image,

and even packaging. The brand is known as being reliable and secure. Part if this is

how long Amazon has lasted that it is now viewed as a secure and familiar company.

Additionally, its products come from retailers which makes them seem more legitimate

than Ebay where the sellers are individuals. The payment system is another security

measure, Amazon uses paypal, it’s own Amazon points, and it’s own Amazon Web

Security software to help ensure that they payment process is secure for the consumer.

Amazon’s logo featuring the underlining smile is an easily recognizable and widely used

image across the company. The Smile is both cheerful and demonstrate Amazon’s

focus on customer satisfaction. Additionally, it is easily recognizable, when seen on the

side of a box on a doorstep, there is no doubt that the product came from Amazon.The

boxes that Amazon uses for products are another form of their brand identity. In 2013,

Amazon began its Frustration­Free Packaging Initiative to both reduce wasted material

and to increase customer satisfaction (sustainablebrands.com). This means Amazon

has done away with the unnecessary extra boxes and plastic packaging to reduce

waste, relying more on the folding of cardboard for security. Additionally, the outside

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has taken a more minimalistic approach with just the sticker and Amazon’s logo on it.

What all this means for the brand is that Amazon has a very distinct packaging

procedure, which is both environmentally friendly, increases customer satisfaction, and

helps o reduce cost.

C. Pricing

Amazon uses a primarily cost matching pricing objective with some elements of volume

orientation. A cost matching objective is characterised by fighting with competitor cost

trying to keep them down, increasing customer value, and maximizing efficiency.

Amazon keeps its costs very competitive in comparison to other more traditional

retailers and tries to draw customers that way. They seek to increase customer value

through value­added services such as Amazon Prime streaming and ‘free shipping’ as

well as a strong focus on customer service and seeking to satisfy time and place utility.

Additionally their efforts to minimize cost through corporate culture, minimal packaging,

just­in­time shipping, and in the past; seeking out states for warehouses that would help

them avoid excess tax. Elements of volume orientation are seen in Amazon’s

distribution in that there is a strong focus on product turnover. This is because Amazon

needs to keep their products moving through the channels to the consumer. Amazon

seeks to avoid price discrimination, or charging different prices per consumer for the

same product. This is because Amazon wants to keep prices low rather than charge the

highest that the consumer is willing to pay. Amazon isn’t trying to make huge profit

margins by charging the consumer more but instead by keeping its own costs down.

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According to Yahoo finance, Amazon has a profit margin of ­.25% so they lose a quarter

of cent for every dollar that they spend. As for sales timing and promotions, throughout

each quarter the company offers select deals and discounts to move inventory. In

addition to normal deals they have ‘lightning­deals’ which are valuable short term sales

that are designed to drive sales and interest. According to Amazon’s third quarter report

of Financial Results, Bezos announced that Amazon Prime members would be

receiving 30 minute advance notice of sales. That same report mentioned a strong

company focus on holiday sales with Amazon planning to participate in both Black

Friday, Cyber Monday and a week long deal event, and other assorted discounts and

sales throughout the rest of the holiday season. Two sections of Amazon’s website

show their more regular discounting policy. These are the coupon and warehouse

pages. The coupon page features digital coupons for various products that Amazon

offers and the Warehouse page discounts on products that are “returned, used,

warehouse­damaged, or refurbished.” This allows the company to keep inventory

cycling and make back some cost on normally unsellable items.

D. Distribution

One of Amazon’s greatest strengths is its logistics. Its distribution system is very

expansive and aims for the highest levels of efficiency. The general supply chain for the

company works with suppliers and third party vendors using Netflix as an intermediary

to consumers, in the case of physical goods, there are also firms that transport the

goods to the consumer. Amazon acts as an online marketplace so it is not just their own

goods that they sell. In actuality, Amazon opens many channels for different suppliers to

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benefit from their retail service. First and foremost products come from Amazon itself,

who supplies products to consumers from their warehouses. The next largest source

are companies who pay to sell their products on Amazon’s website. This includes large

name stores like Target and Best Buy but can also include smaller boutique store who

would otherwise have difficulty selling through a large retailer. Amazon also features

services for pre­owned items that operates very similarly to e­bay; and another service

which allows users to sell through Amazon on their own sites. As a retailer Amazon

would take orders from customers who could place orders through the Amazon website

for products from any of the aforementioned suppliers. After customers placed their

orders on Amazon’s website, the products would then be shipped to them through

another aspect of the supply chain. Amazon follows a rather selective distribution

structure. Though there is some preferential treatment to the US Postal Service, they

allow all major distributors to ship products to customers. In the future, Amazon plans

on moving to a more exclusive structure, not so much limiting who can distribute but

taking more of the distribution upon themselves. There are plans to open up more small

distribution centers which serve to hold, sort, package, and distribute orders. The hope

with the increase of small sortation centers is that Amazon will have more control over

shipping and be able to ensure same day delivery of products. This is because the

sortation centers will be able to distribute orders to the post office or other distributor for

a specific zip code.

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These sortation centers though are only one small part of Amazon’s

internal distribution network. The workhorse of Amazon’s distribution are the fulfillment

centers. The purpose of fulfillment centers is to

E. Promotion

a. Platforms to promote sales (tablet & e­readers) b. Budget for past 3 quarters $2,806,000,000 (up $806 Million) *prime costs c. Traditional advertisements for platform sales

The main characteristics of Amazon’s marketing strategy are the same as throughout

the company; simplicity, personalization, and ease of use. Amazon uses its knowledge

of customers and their past purchases to not only match them to products they have

looked at or that they might like but to personalize each user’s home page. With

sections like, ‘new for you’ and ‘you looked at’ featured on the home screen, the

offerings and appearance are different for every user. The layout also makes it easy for

the consumer to use. The search bar is prominently displayed and intuitive, the site

automatically logs each user in, the most likely products are displayed, the shopping

cart is left open, and users can even go through their browsing from previous sessions

(amazon.com). With all of this you not only see a unified image but an emphasis on

personal selling to each individual customer.

Amazon’s advertising strategy is focused mainly on­line. Though there are traditional

advertising elements for the platform products such as the Kindle. Amazon uses

targeted e­mails very effectively. Utilising their distinctive competency to personally sell

to consumers through their interaction on the site, Amazon sends out highly targeted

e­mails to consumers informing them of products that they looked at, what the cost and

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sales are, and items inside of their cart. All of this while making the e­mail appear as

close to the actual site as possible. Another online source of sales and marketing come

from third party agreements. Amazon allows many other sites to pay to use Amazon

software to link Amazon’s sales capability to their own website. Amazon also purchases

pay­per­click ads on search engines that are simple sidebar ads that are meant to direct

users to their site. Amazon also advertises using its platforms. The Kindle, The Fire, and

Amazon TV all feature links to Amazon’s storefront and directly and quickly interact with

products. For example, the kindle takes users to Amazon’s bookstore where they can

purchase more e­books. All of these marketing strategie are united by being

minimalistic, highly customer­centric, and personalized. According to Amazon’s annual

report, the company’s marketing budget over the past three quarters was $2.806 billion

which was an increase over last years by $806 million (amazon.com). This does not

though include costs for Amazon Prime, despite the company viewing it as an important

part of the marketing strategy.

VII. Marketing Implementation

A. Structural Issues

With this type of innovation, anticipatory shipping, the relationships with the

carriers and distribution centers are the most important. This is all about getting

products to Amazon customers faster and more efficient. Amazon will be looking to cut

costs with this type of strategy within the supply chain. The carriers must be bringing the

39

right equipment to transport the Amazon products. Amazon wants to only ship full

truckloads with this strategy, so that must be accounted for from the carriers. Also, they

must be specifying specific routes in order to cut back on fuel costs and other trucking

costs. This will most likely be the carrier’s job, but that is the reason for having a trusted

carrier. The carrier must understand the whole process of anticipatory shipping and

Amazon’s goals. This is why this relationship must be chosen correctly for Amazon.

The distribution centers for this strategy will be Amazon owned. This is an advantage

but also the communication must be seamless. Inventory levels of products and what is

being shipped to and from the distribution centers is key with this implementation. If

products are not there, then the whole idea behind anticipatory shipping is gone. The

products must be there for same­day delivery or pick­up. The communication can be an

issue with the implementation but it must be seamless in order for this to work. This will

all come down to employee training. With this will come learning the technologies of

knowing inventories and shipping schedules, then being able to relay that to the

important people within that. The communication has to be productive and informational

for all parts of who are involved in order for anticipatory shipping to be successful.

There will need to promotions in order for people to understand anticipatory

shipping. There will be some negative feedback for it being creepy to an extent. But, the

promotion and the handling of this will be important. Consumers must know that the

reason for this is to get products to them faster. That is all and it is for the satisfaction of

the Amazon customer. This part should be of a minimum of an issue. It really all comes

down to the communication with carriers and within Amazon.

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B. Tactical Marketing Activities and Sequence

Specific Tactical Activities (Action Plans)

Estimated

completion time

Product Activities ­ Chief of Operations 1. Make final adjustments to algorithm to ensure right shipping practices. 2. Setup distribution/receiving centers in selected cities. 3. Have logistics strategy in place to ensure lowest cost and on­time shipping.

December 1, 2015

Pricing Activities (any promotional pricing activities?) ­Head of Marketing 1. Offer gifts to selected Amazon Prime members 2. Select products to be offered on sale, ones that will

January 1, 2016

41

be heavily distributed to distribution centers in selected cities.

Distribution Activities ­Chief of Operations 1. Educate and confirm anticipatory shipping strategy to selected carriers. 2. Set up routes and shipping routines with carriers. 3. Create specific inventory at each distribution center.

January 1, 2016

IMC Activities ­Media Manager 1. Advertise shipping to Amazon customers. 2. Have mobile ads in place for smart phones and tablets. 3. Select websites to be advertising on the web.

January 1, 2016

VII. Evaluation and Control

Objective One: Anticipate, package, and ship orders before they are purchased.

­ Have 20% more full truckloads of product being shipped within two years.

­ Increase shipments by 15% within one year.

­ Have less than 10% of defects with anticipated shipping (correctly ship the right

products) within the first two years.

These are some of the controls we will be looking at for objective one. The first

one is all about having more full truckloads being transported. This is so Amazon will

save money off of less­than­truckloads and they will be shipping products before they

are purchased this way also. The next control is about increasing shipments; this is all

42

about the ship part of the main objective. It will also increase the amount of sales per

year also. Then lastly, Amazon does not want to ship products people are not buying in

particular areas. This will increase their inventory costs. Amazon wants to be shipping

the products people are buying after they ship them.

Objective 2: Lower logistics costs

­ Decrease logistics costs by 15% within the first year.

­ Decrease less­than­truckloads by 20% within the first two years.

­ Decrease miles of transportation by 20% within the first two years.

These controls are all dealing with activities within the supply chain that can be

lowered with anticipatory shipping. By decreasing miles traveled and

less­than­truckloads, logistics costs will decrease by a noticeable amount. These are

controls that we will want to be keeping an eye on throughout the implementation

process.

Objective 3: Dissuade customers from entering physical stores.

­Increase sales by 10% within the first year.

­ Increase amount of products that can be picked up same day or delivered same

day by 15% in the first year.

­ Increase amount of new Amazon customers by 10% within the first two years.

The last objective has controls that are dealing with more customers buying from

Amazon. If they are buying from Amazon, then they are not buying from physical stores.

This is how we will gauge our progress with this objective, by checking sales, pick­ups,

43

and deliveries, we will be able to tell how many people are not going into physical stores

to purchase products.

IX. Financial Projections

Amazon getting involved in anticipatory shipping will greatly reduce their costs

within their supply chain. Companies that look within their supply chain to find

inefficiencies can lower their costs 10%­40%(Ulanoff). This is what Amazon is doing

with this type of approach. First, they will be lowering their costs on inventory within their

warehouses. They will have less on hand because they are only going to be carrying

what they think will be sold. Their new way of figuring out who and when will buy what,

will help them keep their inventory under control. They no longer will have to just carry

as much as possible in order to fulfill orders. Then, Amazon will also save money on

shipping. They will no longer be delivering less than truckloads of goods for quick

delivery or even for regular delivery. They will be able to send out more full trucks of

products in order to fulfill the orders that will be made. This will cut down on all shipping

costs. They also will have less deliveries they will have to fulfill from afar for one or two

day shipping. Since the products will be dispersed into other warehouses in order help

lower Amazons supply chain costs, it will lower the time that it would take for their

customers to get products. Now, they will be able to get products faster. With this

strategy it could have same day pick up, which will lower the burden of customers

having to wait a couple days for shipping. This time decrease will have the effect on

sales and them increasing. Some people did not buy from Amazon because of the wait

44

for certain products. Now, the wait is decreased, which will have more people realizing

Amazon is an option for their pick up they need to make.

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X. Appendices

46

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