Amazon's Operational Management and Global Expansion: A Case Study

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Operations Management and Decision-
Making Models

TABLE OF CONTENTS
Introduction......................................................................................................................................1
1. Amazon began as an on-line book retailer. How has it grown to be known as the
"everything store"?......................................................................................................................2
2. What aspects of Amazon's operations management are based on the increased globalization
of world trade?.............................................................................................................................4
3. Amazon’s marketplace focuses on smaller sellers and manufacturers by linking them with a
huge customer base and fulfilment program. Can e-commerce ever truly replace the in-person
shopping experience?...................................................................................................................6
4. What are (or could be) the real long-term implications of the increased presence of Amazon
to the Australian Retail Industry?................................................................................................7
Conclusion.......................................................................................................................................8
References........................................................................................................................................9

Introduction
E-commerce strategy is one of the effective strategies which helped many organisations to
increase their customer base and market share in this competitive world. On the other side,
improves business operations such as- supply chain management also help the organisations to
enhance their product and service delivery in the market. The current report will discuss the
Amazon and its operation management due to which they easily get connected and linked with
their customers. The report will also focus on the implications that Australia retail market may
face with the increased presence of Amazon. The report will also discuss that e-commerce
creates an impact on the sales and revenue of traditional shopping but does not replace the in-
person shopping experienced fully. The report will also discuss that increase in the globalisation
trend the operation management of Amazon get support to improve their business functions and
operations.
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1. Amazon began as an on-line book retailer. How has it grown to be known as the "everything
store"?
Amazon growth information
Amazon is one of the leading organisations considered as the American multinational technology
which mainly focuses on cloud computing, artificial intelligence and e-commerce (Kristensen et
al, 2017). In the year 1994, the foundation of Amazon Jeff Bezos incorporated the organisation,
and Jeff Bezos began Amazon by selling videos and music in the year 1998 but at the time of
organisation began their main international operations is related to the online bookselling in the
Germany and United Kingdom. Amazon began the online services concept by selling books
online, and then they become a leading retailer in the online booking (Bilgihan, et al, 2016).
With the passing time, Amazon also sold customers electronics, video games, home
improvement items, games, software, toys, clothes etc. The objective of Jeff Bezos is to enhance
the online services of Amazon by including more products and services apart from books.
In the year 2002, the Amazon Corporation also started AWS (Amazon Web Services), and they
provide data on the popularity, statistical data and patterns related to internet traffic for the
developers and marketers (Heng et al, 2018). In the year 2006, the organisation also grew
Amazon Web Services portfolio during EC2 (Elastic Compute Cloud) and that rents computers
processing powers along with the S3 (Simple Storage Service) which also rents the data storage
via the internet. During the same year, the Amazon organisation also started its fulfilment by the
Amazon that managed individual inventory and small organisations by selling its belongings
through the internet site (Shanthi and Desti, 2015). In the year 2012, the organisation also bought
Kiva Systems for automating business related to inventory management. In this year they also
purchase the whole market of food as the supermarket chain so that they can also provide
grocery items to their customers online.
How Amazon grows from online booking retailing to everything store
May of 1997 the online bookstore of Amazon went in IPO which is valued at $438 million. It is
also analysed that Amazon once considered as the boring e-commerce business but a purveyor of
the household goods which lacked the Google, Facebook and other tech titans create a vision for
Amazon (How Amazon grows from online booking retailing to everything store, 2019). With the
passing years, the thing which is realised by Jeff Bezos is that they need to enhance their
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business by getting into everything so that customers will easily buy almost every product from
their online store. With the help of the extraordinary leadership skill carried by Jeff Bezos
encourage him to combine the services of cloud computing, customer retail, entertainment,
FMCG, robotics, data science and healthcare with their one brand that is “Amazon”. Jeff Bezos
created global operations with the synergies and economic scale which make Amazon as the
international conglomerates sigh with the envy. The main objective behind entering into
everything is to become of the largest online and e-commerce site in the world that has
everything for their customers (Amazon product and services information, 2019). It is identified
that Amazon with the passing time has involved in everything from books that people read to a
website that people can consume and the food that people eat.
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2. What aspects of Amazon's operations management are based on the increased globalization of
world trade?
The globalisation process is growing in the current time so that trading at worldwide becomes
easy for international organisations. The organisations are using globalisation opportunities to
improve their business operations so that they can supply products and services in the global
market (Yao, 2017). Amazon business operations and its management also based on the
increases opportunities of globalisation for global trading. Following are the operations
management of Amazon and its decision areas which are based on the globalisation to enhance
their online trading at the international level:
Supply chain management: The operation management of Amazon is a concern with the
strategic decision so that they can streamline their supply chain to support the objectives of
Amazon. Amazon supplies their products and services through automation and also enabling the
buyers and suppliers for accessing some of their IT assets (Amazon operation management,
2019). With the growing globalisation trend in the market, supply chain management of Amazon
also increases as they need to enhance their supply chain at the global levels so that they can get
connected with international customers too. World trade opportunity through increased
globalisation also put an impact on the supply chain management of Amazon because through
this buyers can track their orders and also communicate with the suppliers by using the data
available from the website of Amazon (Fernie and Sparks, L, 2018).
Layout strategy and design: Under this strategic area of decision the operation manager of
Amazon main objective is to optimise their human resource movement, information and
materials. The organisation Amazon also addresses the same objective by the quality of layout
designs which align with the process of computer-assisted. The operation management of
Amazon is also based on the increasing globalisation trend because by considering this fact,
Amazon properly organised its items in its centres and warehouses as per their computerisation
policy (De Koster et al, 2017). With the support of global trading, Amazon also maximises its
shelf space and also minimised its aisles for achieving the optimal capacity of storage without
reducing their efficiency of the process in the online retail Amazon business.
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Quality management: The key objective in this strategic area of decision is related to maximise
operation output quality so that they can satisfy the expectations of their customers. The business
operations of Amazon have increased after using the international market opportunity due to
which responsibility of quality management is also increased. This approach of operation
management also involves continuous improvement so that their e-commerce business services
can be improved (Sharma and Lijuan, 2015). As per the globalisation enhancement for world
trading, Amazon uses its culture through which they support the idea of creation and innovation
among its employees. This type of innovation also encourages the efforts of Amazon employees
and that helped them to manage the quality of e-commerce services.
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3. Amazon’s marketplace focuses on smaller sellers and manufacturers by linking them with a
huge customer base and fulfilment program. Can e-commerce ever truly replace the in-person
shopping experience?
The supply chain of Amazon has increasing day-by-day as they are more focusing on the smaller
sellers and manufactures as they can connect the Amazon with their customers and increase the
customer base. Amazon has changed the supply change management strategy through which
they can enhance their network in the market so that the customer base will be increased
(Chakraborty et al, 2016). E-commerce is an effective strategy which increases the connectivity
and link among the organisation and its customers and e-commerce also enhance the supply
chain of the organisation. Expansion of the online business at an international level enhances the
supply of the products and services for which Amazon hire small sellers who will deliver their
products to their customers (Pelet et al, 2017).
With the increased competition in the market, Amazon invests in the automation supply chain
which improves their product and services delivery chain as they get connected with the number
of sellers and manufacturers who deliver Amazon products at the doorsteps of their customers
(Cass et al, 2017). With the help of the e-commerce platform, the opportunities for online
retailers and sellers have increased due to the enhanced supply chain of Amazon. E-commerce
service affects the traditional method of shopping but not replaces the in-person shopping
experience fully because still many people visit stores and purchase products as they believe in
personal presence (Hodge et al, 2019).
The given statement is not true because the impact of e-commerce and online shopping mainly
influence the youth and teenagers but still elder and old people believe in personal shopping. It is
also analysed that most of the people still do not trust fully in online shopping because they think
online products have some quality issues. Addition to this, if e-commerce service provider
organisations such as- Amazon does not have a return policy and refund policies then even youth
or teenagers also prefer to do traditional shopping by trying the product personally (Stevens et al,
2018). So, focusing on the enhancement of supply chain by focusing on smaller sellers do affect
the in-person shopping experience but does not fully replace the traditional shopping system
from the mindset of the customers.
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4. What are (or could be) the real long-term implications of the increased presence of Amazon to
the Australian Retail Industry?
The market of e-commerce is increasing very fast due to which Amazon achieves high benefits
and profits but due to this market of the retail industry is getting affected. Many people in the
global market are getting attracted towards online shopping, and the retails landscape changes
continuously and rapidly (Melis et al, 2015). With the increased presence of Amazon affect the
retail industries of Australia, and that negative impact reduces the customer base of the
supermarkets, clothing industries and electronics stores also.
Kmart Australia is the leading supermarket chain of Australia, and they provide a large range of
grocery and other products to their customers from their retail stores and they operate around 228
stores across New Zealand and Australia (Belavina et al, 2016). On the other side, Myer is the
departmental store of Australia and provide fashionable clothes, beauty products; homewares
products and many more products in the states of Australia. So if the presence of Amazon with
the e-commerce services has increased in the retail market of Australia then in the long term, the
services of these two retailing industries get affected very badly, and that reduces Kmart
Australia and Myer customer base along with the profitability ratio (Chakraborty et al, 2016).
Amazon also has the extensive supply chain as they are focusing on small sellers who deliver
their products and services to its customers on time which also create a negative impact on retail
industries supply chain (Poushneh and Vasquez-Parraga, 2017). The supply chain of the online
service provider is large as compare to the retail industries due to which customers prefer to
purchase every type of product from the Amazon as compare to the retail stores. The major
implications that Australia retail industry may face due to increases presence of Amazon in the
market of Australia are- increased competition in the market, loss of customer base, and
reduction in sales and low revenue (Emrich and Verhoef, 2015). Online services attract the
customers because this is the easy and quick way to purchase anything and get the product at
home directly along with the online payment which reduces the interest of customers from the
in-person shopping experience.
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Conclusion
The report has concluded that supply chain management plays an important role in the increases
business and market share of Amazon because a large supply chain helps them to connect easily
with their customers. The report has also concluded that increases presence of Amazon affect the
long term business of Australia as an e-commerce platform attracts the customers more as
compare to the in-person shopping. The report also analysed that Amazon began its business
with the online books retailing but later they more towards everything so that customers can buy
almost everything from one site easily and quickly. With the above report, it has also concluded
that Amazon is focusing on the small seller which increases their supply chain, but this has not
replaced the traditional and personal shopping experience for some people because still, aged
people believe in personal shopping by confirming its quality with the cost. In the end, the report
has discussed some implications of Amazon services on Australia retailing industries.
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References
Books and Journals
 Belavina, E., Girotra, K. and Kabra, A., 2016. Online grocery retail: Revenue models and
environmental impact. Management Science, 63(6), pp.1781-1799.
 Bilgihan, A., Kandampully, J. and Zhang, T., 2016. Towards a unified customer
experience in online shopping environments: Antecedents and outcomes. International
Journal of Quality and Service Sciences, 8(1), pp.102-119.
 Cass, N.F., Shove, E.A., Jones, I. and Marsden, G., 2017. The Last Mile and the Next
Day: The changing times and spaces of shopping–implications for energy demand.
 Chakraborty, R., Lee, J., Bagchi-Sen, S., Upadhyaya, S. and Rao, H.R., 2016. Online
shopping intention in the context of data breach in online retail stores: An examination of
older and younger adults. Decision Support Systems, 83, pp.47-56.
 De Koster, R.B., Johnson, A.L. and Roy, D., 2017. Warehouse design and management.
 Emrich, O. and Verhoef, P.C., 2015. The impact of a homogenous versus a prototypical
Web design on online retail patronage for multichannel providers. International Journal
of Research in Marketing, 32(4), pp.363-374.
 Fernie, J. and Sparks, L. eds., 2018. Logistics and retail management: emerging issues
and new challenges in the retail supply chain. Kogan page publishers.
 Heng, Y., Gao, Z., Jiang, Y. and Chen, X., 2018. Exploring hidden factors behind online
food shopping from Amazon reviews: A topic mining approach. Journal of Retailing and
Consumer Services, 42, pp.161-168.
 Hodge, S.K., Honeycutt, E.D. and Shipley, D., 2019. Toward an Improved Understanding
of Online Customer Service Delivery to Millennials. Services Marketing Quarterly, pp.1-
15.
 Kristensen, M., Penner, J., Nguyen, A., Moy, J. and Lam, S., 2017. Company Synopsis
for: Amazon. com, Inc.
 Melis, K., Campo, K., Breugelmans, E. and Lamey, L., 2015. The impact of the multi-
channel retail mix on online store choice: does online experience matter?. Journal of
Retailing, 91(2), pp.272-288.
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 Pelet, J.É., Ettis, S. and Cowart, K., 2017. Optimal experience of flow enhanced by
telepresence: Evidence from social media use. Information & Management, 54(1),
pp.115-128.
 Poushneh, A. and Vasquez-Parraga, A.Z., 2017. Discernible impact of augmented reality
on retail customer's experience, satisfaction and willingness to buy. Journal of Retailing
and Consumer Services, 34, pp.229-234.
 Shanthi, R. and Desti, K., 2015. Consumers' perception on online shopping. Journal of
Marketing and Consumer Research, 13, pp.14-21.
 Sharma, G. and Lijuan, W., 2015. The effects of online service quality of e-commerce
Websites on user satisfaction. The Electronic Library, 33(3), pp.468-485.
 Stevens, J.L., Spaid, B.I., Breazeale, M. and Jones, C.L.E., 2018. Timeliness,
transparency, and trust: A framework for managing online customer complaints. Business
Horizons, 61(3), pp.375-384.
 Yao, J., 2017. Optimisation of one-stop delivery scheduling in online shopping based on
the physical Internet. International Journal of Production Research, 55(2), pp.358-376.
Online
 Amazon operation management, 2019 [Online] [Assessed through]
<http://panmore.com/amazon-com-inc-operations-management-10-decisions-areas-
productivity/>, [Assessed on 23rd April, 2019]
 Amazon product and services information, 2019 [Online] [Assessed through]
<https://digit.hbs.org/submission/amazon-from-a-book-store-to-the-everything-store-to-
running-the-internet/>, [Assessed on 23rd April, 2019]
 How Amazon grows from online booking retailing to everything store, 2019 [Online]
[Assessed through] <https://originmarkets.com/how-amazon-became-the-everything-
store/>, [Assessed on 23rd April, 2019]
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