Amazon strategies to manage its inventory

Amazon strategies to manage its inventory Amazon .com called itself Earths Biggest Bookstore because it has been ranked as the best consumer e-business. It sells books, music over the internet. From both market and supply chain management point of views, Amazon has some challenges and strengths. Managing inventory is one of the company opportunities to overcome its financial barriers regarding the warehouses and shipping costs. Amazon follows some strategies to manage its inventories. It had the decision to outsource its inventory to reduce its inventory costs and to sell competitors products on its site to achieve both managing its customer relationship and sustaining its competitive advantage. As its competitors estimate that Amazon.Com has the highest percentage of the e-business bookstore. So, Amazon tries to share its information and outsources this area of its business to improve inventory cost and customer service levels. 1- Amazonstrategies to manage its inventory: Amazon found the decision of stocking the stores with all the possible products was not the right one. Although that the customer might choose not to purchase if there are not enough goods in the stock, It decided to manage its inventory in the season of 2000, following certain strategies. It started from reducing the warehouses, concentrating more on the quality of the products and the manufacturer or the publisher of the products. Then it had to decide the center of distribution it can send its products to and know how to receive and track the product once it was in the warehouse. Amazon also decided to buy its products directly from the manufacturer to sustain its vendors relationships to gain the best deal from them. Amazon.com developed a distribution infrastructure to provide its customers with the fast delivery from the company directly. Its distribution facilities have the great impact on increasing its products that are delivered and shipped very fast to the customers. The quick shipping process comes out of the great availability of the goods to achieve its customer satisfaction. This network distribution is called manufacturer storage with direct shipping which is one of the six distinct distribution network designs. It has advantages and disadvantages. Through this network, manufacturer storage with direct shipping can be appropriated for a large variety of low demand, high value items with several partial shipments. Drop-shipping model is also suitable if it allows the manufacturer to postpone customization, and there should be few sourcing locations per order. Drop shipping is not be suitable to be used if there are multiple locations that have to shipped directly to customers on a regu lar basis. Amazon can centralize inventories at the manufacture and then save inventory costs. Also, Drop shipping offers the manufacturer the opportunity to further lower inventories by postponing customization until after the customer order has been placed. However, when a customer orders several items from several manufacturers such as Ingram and Amazon, this include multiple shipments to the customer and thus increase costs. Also, this business model can has negative effect on Amazons competitive advantage by making no entry barriers for competitors because of its popularity and better margins (Chopra, 2001 ) . In terms of handling costs because the manufacturer has to deliver the order directly to the customer, Amazon developed its software to manage the split shipment if multiple items are ordered. So Amazon needs to share its information with the suppliers to provide the customers with the product availability and order processing to save time and reduce inventories. However, Cachon and Fisher point in their paper Supply Chain Inventory Management and the Value of Shared Information that information technology or software give the retailer the chance to share demand and inventory data faster and cheaper. They investigate how information sharing whether it is traditional information sharing or full information sharing between the retailer and the supplier affects supply chain inventory management regarding reducing lead times and increasing delivery frequency by reducing shipment batch sizes. The result of the study they have done is that the average of full shard information policy in supply chain costs is lower than of traditional information policy. But from Chopras and Meind perspective IT must be fully shared between all the stakeholders; suppliers and retailer. Amazon.com provides its customers with experience from beginning to end and own the whole data which gives them all the information they need about the product availability though the invent ory is located at the manufacturer. At the same time the buyers should have a clear idea about the order processing that is placed at the retailer. By owning such a system, Amazon could achieve high level of customers services because the information is directly linked to the customers in the system. As the company expands its operations, these systems are replicated across the distribution centers. Amazon.coms case is a good examples that illustrates how evolving industry standards can affect data-sharing strategies between customers and suppliers because it does not stock all the books advertised on its site, but shares customers order data with suppliers to speed customers orders.. This system solves the problem of inventory costs because Amazon. com spent US300m in 1999 to outfit the 3 million square feet of warehouse space. Finally Amazon does not need to stock every single item in the warehouse. Instead of that, the retailers or their vendors will send the products without eve r being stocked on the shelves of the warehouses. So, it started to develop its software to increase competitive pressures on all on line retailers in general and to rearrange its warehouses in different regions in particular. Amazons unique strategy is described as change and growing intense competition. Its systems and network infrastructure increase the traffic on its Web site and expanding sales volume through its transaction-processing systems. Amazons main concern regarding its network distribution and software is to avoid the unanticipated system disruptions, slower response times, weakens customer service and impaired quality and speed of order fulfillment, or the postpone in supporting the customer with the accurate financial information. 2) Outsourcing its inventory management: I think Amazon had taken the right decision to outsource its inventory management. In the case of Amazon did not outsourced all of its inventories but it keeps its popular ounces. This was a good decision for many reasons; the major ounces are to cut down its costs and give particular concern on it core activities. It partnered with other distributors for shipping the inventory like Ingram Micro and Cell Star. At the time the partners shipped the items, Amazon concentrated on its e-commerce expertise. Also, Amazon managed order fulfillment while Toys R Us managed the supply processes. Amazon outsourced much of its fulfillment. Although it acquired more than 4.5 million square feet of warehouse space worldwide by the end of 2000, it is using only 40 percent of its warehouse space. Through outsourcing; Amazon increases its efficiencies in distribution. From a another perspective there are Some risks of outsourcing because of the complexity, confusion or unclear decision making, and bro ken information flows in decentralizing, which can be corrected by redesigning processes and improving information technologies. Others thinks that small companies only can get benefit from outsourcing or third party because they need experience and supports in technology. However outsourcing leads large companies to have complex supply chains and many distribution managers (Razzaque and Cheng 1998). Amazon outsourcing inventory contributes to profits through providing its employees and users with the methods and strategies to maintain the firms competitive advantage, adding value to the goods, enriching customer service and assisting in opening new markets. One of the benefits of third party logistics is providing provide their customers experience that otherwise would be hard to acquire in-house. An company should consider certain criteria in outsourcing process such as quality, capacity, labor, scheduling and skill to be important in a make-or-buy decision (Razzaque and Cheng 1998). In Amazons case, it had an agreement with Ingram Micro Inc be cause it is one of the largest wholesale of electronic goods to provide logistics to services for computers at Amazon. com. Moreover, it has great experience in distributing process and customer satisfaction. 3- Selling others products on its website The idea of selling other competitors products on Amazons site is very profitable because the clients can be aware of the prices of others product compared with Amazon. This provides the company with more profits without making advertising to their low price products. It opens new stores on its site to give greater availability of the products and draw more customers. IT gives the customers the chance to turn to Amazon to buy more than books and music especially because Amazon handled the site orders, while the third party company handled the inventory. It may seem at first that a customer always wants the highest level of performance along all these dimensions. In practice, however, this is not always the case. Customers ordering a book at Amazon.com are willing to wait longer than those that drive to a nearby Borders store to get the same book. Customers have the advantages to find a variety of books at Amazon compared to the Borders store. On the other hand, firms that target cust omers who value short response times need to locate close to them. These firms must have many facilities, with each location having a low capacity. Thus, a decrease in the response time customers desire increases the number of facilities required in the network. For example, Borders provides its customers with books on the same day but requires about 400 stores to achieve this goal for most of the United States. Amazon, on the other hand, takes about a week to deliver a book to its customers, but only uses about 5 locations to store its books.

Consumer Buying Behavior Essay

Abstract: ‘Consumer is king’ –the statement carries profound truth in it. Today the success of any firm depends upon the satisfaction of consumers. For satisfying the consumers the firm should know about the behavior of the consumers. In these circumstances understanding consumer is a very difficult task because of the changing technology, innovation, and changes in life style. Researchers conducted many research in this area, and they given only few suggestion, but there is no final conclusion. As per the ideas given by the researchers, there are two factors influencing the consumers such as intrinsic and extrinsic factors. It is difficult to classify consumers by conventional demographic factors and unless their thought process and buying behavior are fully understood, decisions on product designs and packaging, branding and distribution channels are likely to be misplaced. With the inevitability of change looming large over the horizon, Indian companies must le arn from their western counterparts; not only to identify the sources, timing and direction of the changes likely to affect India, but also the new competencies and perspective that will enable them to respond to these changes, comprehensively and effectively. Look more:  the consumer buying process begins when essay This study mainly focus on understanding the external factors like demographic, social, cultural ,price, quality ,product attributes etc for buying toothpaste. The market share of any product is highly determined by the purchasing behavior of the consumers. Following study is conducted by the researcher to find out the behavior of the consumers, to analyze the preference of consumers, & consumer awareness. Descriptive research design was adopted and the data is collected through primary and secondary sources. The method adopted for conducting survey is questionnaire; Simple random sampling technique was adopted for selecting the consumers. Key words: Consumer behavior, Toothpaste buying pattern, Toothpaste awareness, Promotion impact, Attribute impact. 1. Introduction Consumer behavior is stated as the behavior that consumer display in searching for, purchasing, using, evaluating, and disposing of products, services and ideas that they expect will satisfy their needs. The study of consumer behavior is concerned not only with what consumers buy, but also with why they buy it, when and how they buy it, and how often they buy it. It is concerned with learning the specific meanings that products hold for consumers. Consumer research takes places at every phase of consumption process, before the purchase, during the purchase and after the purchase. According to Philip Kotler defined consumer behavior as â€Å"all psychological, social and physical behavior of potential customers as they become aware of evaluate, purchase, consume and tell other about products and services†. The scope of consumer behavior includes not only the actual buyer and his act of buying but also various roles played by different individuals and the influence they exert on the final purchase decision . Individual consumer behavior is influenced by economic, social, cultural, psychological, and personal factors. 1.1 Consumer purchase decision A decision is the selection of an action from two or more alternative choices. Consumer decision to purchase the goods from the available alternative choice is known as â€Å"consumer purchase decision†. The various options of the consumer may be classified into five main types of decisions. They are what to buy, how much to buy, where to buy, when to buy, how to buy. The participants in the buying decisions may be classified as the initiator, influencer, decider, buyer and users. The marketing people should initiate the participants in the purchase decision to make the purchases of the product at different marketing strategies. There are number of reasons why the study of consumer behavior developed as separate discipline. Marketers had long noted that consumer did not always act or react, as marketing theory would suggest. The size of the consumer market in the country was vast and constantly expanding: millions of dollars were being spent on goods and services by millions of people. Consumer preferences were changing and becoming highly diversified. 1.2 Indian Oral Care Industry Many people in India still clean their teeth with traditional products like Neem twigs, salt, ash, tobacco or other herbal ingredients. Average all India per capita consumption of toothpaste is a dismal 82gms.The dentist to population ratio is a critically low 1:35000 in the country. This results in low oral hygiene consciousness and widespread dental diseases. Less than 15% of the Indian toothpaste users brush twice a day. Colgate and Hindustan Lever together account for over 85% of the organized toothpaste market. Red and Black toothpowder still accounts for 35% of the toothpowder market. In toothpowders, Colgate and Dabur are the leading players sharing between them 75% of the market 2. Review of literature 2.1 Consumer behavior Consumer behavior has been always of great interest to marketers. The knowledge of consumer behavior helps the marketer to understand how consumers think, feel and select from alternatives like products, brands and the like and how the consumers are influenced by their environment, the reference groups, family, and salespersons and so on. A consumer’s buying behavior is influenced by cultural, social, personal and psychological factors. Most of these factors are uncontrollable and beyond the hands of marketers but they have to be considered while trying to understand the complex behavior of the consumers. In this study, the researcher emphasizes the importance of lifestyle and its impact on the buyer behavior. 2.2 Consumer Personality Factors There are two factors mainly influencing the consumers for decision making: Risk aversion and innovativeness. Risk aversion is a measure of how much consumers need to be certain and sure of what they are purchasing (Donthu and Gilliland, 1996).Highly risk adverse consumers need to be very certain about what they are buying. Whereas less risk adverse consumers can tolerate some risk and uncertainty in their purchases. The second variable, innovativeness, is a global measure which captures the degree to which consumers are willing to take chances and experiment with new ways of doing things (Donthu and Gilliand, 1996).The shopping motivation literature is abound with various measures of individual characteristics (e.g., innovative, venturesome, cosmopolitan, variety seeking), therefore, innovativeness and risk aversion were included in this study to capture several of these traits. Measures by Donthu and Gilliland (1996) were used to measure innovativen ess and risk aversion. 2.3 Perception: Perception is a mental process, whereby an individual selects data or information from the environment, organizes it and then draws significance or meaning from it. 2.4 Perceived fit Perceived fit is an attitudinal measure of how appropriate a certain channel of distribution is for a specific product .Morrison and Roberts (1998) found that consumer’s perception of the fit between a service/product and a channel is very influential in determining whether they will consider using that channel for a specific service. In fact, perceived fit was found to be more important than consumer’s preferences for the distribution method or service. 2.5 Product Class knowledge Product class knowledge is a measure of consumers perceptions of how much they know about a specific class of products (eg.,cars)This type of measure is consistent with what Brucks(1985) called subjective knowledge, that is, consumers self-perceptions of knowledge levels. This is often contrasted with objective knowledge, which is what consumers actually know. Park and Lessing (1981) proposed that subjective knowledge provides a better understanding of consumers decision making processes because consumers level of confidence in their search and decision making behavior, independent of their objective knowledge. 2.6 Product type Past research indicates that consumers purchase and channel decisions might be influenced by the type of product being investigated (Cox and Rich 1964:Lumpkin and Hawes 1985;Morrison and Roberts 1998:Papadopoulos 1980:Prasad 1975:Sheth 1983: Thompson 1971). In particular ,these authors state that certain products might be more appropriate for one channel or another, which ultimately influences consumers channel preference and choice. 2.7 Quality It is our aim to provide the best product for the consumer and we believe that if the products have quality the consumer will pay the price, says Amal pramanic, regional business director .Oral-B 2.8 Packaging Packaging establishes a direct link with the consumers at the point of purchase as it can very well change the perceptions they have for a particular brand. A product has to draw the attention of the consumers through an outstanding packaging design. Earlier packaging was considered only a container to put a product in, but today, research in to the right packaging is beginning at the product development stage itself. Packaging innovation has been at the heart of Dabur’s attempt to rap with the urban consumers. It spends large sums annually on packaging research.-â€Å"We have been laying emphasis on aesthetics, shelf appeal and convenience for consumer’† says Deepak Manchandra, manager packaging development 2.9 Promotion The greatest challenge faced by companies today is holding and increasing their market share and value. This is always a strenuous exercise and one of the tools for the same is marketing. There is no specific game rule available for using these marketing tools .The reason is: each promotional tool has its own characteristics. 2.10 Familiarity with a channel Consumer’s familiarity with a channel is a measure of the general experience they have with purchasing products through specific channels (i.e.. catalog, internet, and bricks-and-mortar retailer). Through frequent use consumers should become accustomed to using the channel, which reduces their apprehension and anxiety in purchasing products through the channel. 2.11 Brand Awareness According to Rossiter and Prey (1987), brand awareness precedes all other steps in the buying process. A brand attitude cannot be performed, unless a consumer is aware of the brand. In memory theory, brand awareness is positioned as a vital first step in building the bundle of associations which are attached to the brand in memory (Stokes, 1985). 2.12 Family influence A family exerts a complex influence on the behaviors of its members. Prior family influence research has focused on intergenerational rather than intergenerational influence in consumer generationalisation. As has been compellingly demonstrated, parents influence children (Moore, Wilkie, and Lutz2002; Moschis 1987).Yet, consumption domains clearly exist where sibling efforts may also be exerted 2.13 Shopping motives Shopping motives are defined as consumer’s wants and needs as they relate to outlets at which to shop. Two groups of motives, functional and nonfunctional, have been proposed by Sheth (1983). Functional motives are associated with time, place, and possession needs and refer to rational aspects of channel choice. Whereas nonfunctional motives relate to social and emotional reasons for patronage. The functional motives included: convenience, price comparison, merchandise assortment. The nonfunctional motives entail: recreation.

Multicultural Diversity A Cultural Lens Into My Profession

Developing full multicultural competence appears to be a journey and not a destination. Through this course I have realized that as I continue to become more mindful of my own multicultural awareness that it is simultaneously implementing a cultural lens into my profession. With this expansion of consciousness it dawns on me that there are many areas that would befit me to continue to grow in, both personally and professionally. This course has assisted me to open my views of what multicultural diverse means and the complexity of implementing cultural awareness and understanding. In my mind I have always been understanding, accepting, and tolerable of cultural differences in my daily life and have attempted to treat individuals equally. Issues arose from class however that spurred me to challenge not only my beliefs but also my actions in these areas. I have worked with a mixture of populations and have learned to put all biasness aside when doing so, but there have been populations that I have not worked directly with and therefore was not aware of any personal biasness attached. It has come to attention that I have never worked with a female clients and this has severely limited opportunities to grow and be evaluated in this area. After completing the prejudice and discrimination assessment in class it suggested that my most uncomfortable area were with female populations. This is an area I have never identified of needing added attention because I was raised byShow MoreRelatedEthics Paper Rough Draft : Group Dynamics2624 Words   |  11 Pageswhich is first to outline the prescribed or mandatory professional behaviors by which counselors are expected to govern their conduct and secondly to know that a code contains aspirational components, which encourages active ethical beliefs of the profession (Kocet, 2006). 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The Perks Of Being A Wallflower And Scotty Smalls - 712 Words

A coming of age story mainly focuses on the development of a character from the beginning to end. It can be a variety of things such as transitioning from a teenager to an adult, but during the development, many adventures and painful lessons are learned. Charlie Kelmeckis from the novel The Perks of Being a Wallflower written by Stephen Chbosky, and Scotty Smalls from the film The Sandlot directed by David Evans, represent the metamorphic transitions of the mind, body, and soul which all take part in a coming of age. As stated, developing a personality trait is a very important aspect of coming of age in the state of mind. In Charlie‘s case it can be shown that he had no companions at the beginning of his freshman year in high school.†¦show more content†¦His friend Benny Rodriguez taught him how to play and improve in baseball. All through the summer, his skills in the sport progressed. Everyone was proud of his success and through Scotty’s journey, his group of friends were there supporting him along the way. Although Charlie and Scotty overcame many obstacles while adapting to new changes, they sometimes did not believe in themselves. At the start of the film, Scotty was narrating a portion saying, â€Å"I moved to the neighborhood two weeks before school let out. It should have started off with loads of great things happening for me, but it didnt.. it was a lousy way to start the fifth grade† He was implying that he wasnt delighted at the fact that he didnt have any friends, and hinted that he desperately wanted to flip the problem and start making changes that would influence him in an exceptional way. Charlie had a similar situation because when he first met his friends Sam and Patrick, they all attended a party after a football game, and at the party Charlie got drunk and confessed some of his past while making his friends feel sympathetic towards him. This made Sam and Patrick feel worried for him, so both of them decided to impact Charlie in a supportive way to make him feel valuable and welcome. Since society set standards such as how popular you should be, or how good you should look, both of these