Operations Management

Operations Management Case Studies case study (20 Marks) In August 2012, Amazon.com, the world's biggest online retailer, announced that it would introduce same day delivery of its orders as a service option to its customers and make next day delivery standard service. This move came in response to the regulatory changes in some states of the US that required consumers to pay sales tax, which in turn would strip it off its price advantage. In order to stay ahead of the competition, Amazon decided to cut its shipping time. In 2005, the company had introduced free two day shipping and discounted one day shipping rates in the US on eligible purchases for a flat annual fee under a service known as‘ Amazon Prime'.

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 a an option and made next day delivery a standard service to all its customers. In 2013, Amazon.com was a Fortune 500 company and a global leader in ecommerce. It had a wide array of products, international sites, and a world wide network of fulfillment centers and warehouses and customer service centers. It had developed a customer base of around 30 million people.

The company was a retailing site that followed a sales revenue model and made money by taking a small percentage of the sale price of each item sold through its website. It also allowed sellers to advertise their products by paying a fee... 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.

Answer the following question. Q1. Discuss the issues and challenges in the logistics and supply chain management of retail and ecommerce businesses. Q2. Explain the concept of ecommerce and its impact on traditional retail.