Abstract

This case discusses Amazon.com’s business model, supply chain, and its order-delivery processes. In 2005, Amazon.com introduced a premium membership scheme called ‘Amazon Prime’. It was a free two-day shipping and discounted one-day shipping rates service offered to the members in the US on eligible purchases for a flat annual fee of $79. Over the years, the service was extended to other countries like Japan, the UK, Germany, France, and Canada. In 2009, Amazon introduced same-day delivery in 10 big cities in the US, which were close to Amazon warehouses. However, in August 2012, Amazon.com introduced same-day delivery as an option and made next-day delivery a standard service to all its customers. However, analysts were skeptical about the success of the model due to the impracticality of the model and logistical hurdles that the company could face. Apart from these problems, the delivery model also faced competition from other big and small players. This case is meant for MBA students as a part of the E-commerce/ Operations Management/ Supply Chain Management courses. It can also be used in a core strategy curriculum.

Learning Objectives

The case is structured to achieve the following Learning Objectives:

• Understand the issues and challenges in the logistics and supply chain management of retail and e-commerce businesses.
• Analyze the reasons for Amazon’s developing same-day delivery capabilities.
• Understand the concept of e-commerce and its impact on traditional retail.
• Understand the impact of Amazon’s same day delivery on the industry and the increased competition among online and physical stores.

Keywords

E-commerce, Supply chain, Supply chain management, Logistics, Same-Day delivery model, business model, Order-Delivery Process, Fulfillment capabilities, Same-Day delivery capabilities, Fulfillment centers, Warehousing network, Six Sigma, Lean Manufacturing, Total Quality Management, Amazon