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Group 1Group 1GMBA 9988505 Erica ITI B9969006 AmyGMBA 9988520 Rossi ITI B9969015 VeraGMBA 9988532 Pablo ITI B9969027 FrankieGMBA 9977589 Sandy ITI K9969037 Panny ITI R9969045 Danny

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1.1 Why is Amazon building more warehouses as it grows?

• Amazon sells books through the customers’ orders from internet. Once it got the orders and then it shipped the books to customers from warehouse directly. Since its size get bigger, it need to keep the inventory to meet the customers’ need in order to fulfill orders quick and effectively. Also, as more warehouses being built, the distance for delivery will decrease so the delivery cost will reduce as well.

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• Scale economy When the main purchase power reach a certain extent, we will

intuitively build a warehouse to cover the sales in this region. • Strategically arrangement

Take future development into consideration.

• Convenient communications With a better communicating location, it could cooperate with the delivery company more efficiently and lower the delivery cost.

• Renting costAfter considering reasons above, the renting cost should come in now. Cost is always one of the reason for choosing the location.

1.2 How do you decide the amount of warehouse?

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2. What advantages does selling books via the internet provide over a traditional bookstore? Are there any disadvantages to selling via Internet?

• Advantages:

1. Reduce physical and administrative cost2. Fulfill various customer’s needs

Online bookstore is able to provide more categories than traditional store.

3. Build up database system Online bookstore can analyze customer’s need through their purchase history.

4. Easy to search It’s much easier for customer to find out or search their needs online.

5. Develop additional channel for customer to see the products.6. Chain selling7. Added value

online bookstore can sell more products except books.

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• Disadvantages:

1. Privacy problem2. Payment security3. Gap in perception4. Inability to feel the physical5. Can’t fulfill real-time requirement

2. What advantages does selling books via the internet provide over a traditional bookstore? Are there any disadvantages to selling via Internet?

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3. Should Amazon stock every book it sells?

• No.

We can consider the question by dividing by two categories

• Standard inventory Amazon should store physical inventory of the popular books it sells as standard inventory in order to fulfill these customers’ needs in a certain short time.

• “Just In Time” inventory Amazon doesn’t have to stock books not in popular demand. When

Amazon receives orders which aren’t in stock, it can cooperate with the publisher to meet the unexpected demand. Furthermore, it can save lots of space to reduce the inventory cost.

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4. What advantages can brick-and-mortar players derive from setting up an online channel? How should they use the two channels to gain maximum advantages?

• Advantages:

1. Providing another promotion and marketing channel 2. Saving cost on customers’ survey 3. Increasing consumers 4. Sense of security 5. Direct after-sale service

• Maximum advantages:

1. By internet, we can collect more detailed information about customers so that we can make customer database. With that, we can build up the optimal marketing strategy.

2. Providing two channels to customers makes it more convenient and also fit their own needs. At the same time, it could also save unnecessary cost to the company.

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5. Should traditional booksellers like Barnes and Noble integrate e-commerce into their current supply chain or manage it as a separate supply chain?

Downstream

Upstream

As the figure shows: Upstream supply chain should be integrated, since it doesn’t have to do any change to support its new e-commerce. However downstream supply chain cannot be integrated, because of the different frequency of order processing between physical bookstores and individual online customers.

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6. For what products does the e-commerce channel offer the greatest advantage? What characterizes these products?

• Virtual goods – such as software; funds and stocks; tickets; information • Physical goods – foreign products; the product that buyers and sellers are

hard to find each other

Characteristics• The feature or quality of goods can be easily showed from the limited

pictures or information on the internet. • Its traditional channel can be easily replaced by e-commerce channel - Less cost (e.g. display and stock and rent of stores cost can be eliminated)• The searching cost in traditional channel is much higher than e-commerce.