When Jeff Hews founded Amazon.com in 1995, the online retailer focused just on selling books. Music and videos were soon added to the mix. Today, you can purchase a wide range of media and general-merchandise products from Amazon, which is now the world's largest online retailer, with over $85 bil- lion in annual sales. According to Bezos, Amazon's success is based on three core factors: a relentless focus on delivering value to customers, operating efficiencies, and a willingness to innovate.

Amazon offers customers a much wider selection of merchandise than they can find in a physical store, and does so at a low price. Online shopping and purchasing is made easy with a user-friendly in- terface, product recommendations, customer wish lists, and a one-click purchasing option for repeat customers. The percentage of traffic that Amazon gets from search engines such as Google has been falling for several years. Where as other online retailers are becoming more dependent on third-party search engines. This indicates that Amazon is in- creasingly becoming the starting point for online purchases. As a result. its active customer base is now approaching 250 million.

To deliver products to customers quickly and accurately. Aniaion has been investing heavily in a network of distribution centers. In the United States alone there are now over 40 such centers. Sophisticated software analyzes customer purchasing pat-terns and informs the company what to order, where to store it in the distribution network, what to charge for it, and when to mark it down to shift it. The goal is to reduce inventory-holding costs while always having product in stock. The increasingly dense network of distribution centers enables Amazon to reduce the time it takes to deliver products to consumers and to cut down on delivery costs. As Amazon grows it can support a denser distribution network, which it turn enables it to fulfill customer orders more rapidly and at a lower cost, thereby solidifying its competitive advantage over smaller rivals.

1. What functional level strategies has Amazon pursued to boost its efficiency?

2. What functionallevel strategies has Amazon pursued to boost its customer responsiveness?