ased on the facts present in this case, what do you think is Amazon's competitive strategy? Why?

2.

If a brick

-and

-mortar retailer were to consider implementing FBA, what new business processes would it need to develop?

What existing business processes can it discontinue? What costs would it save?

3.

Continuing the response from #2 above, what new business process

es and corresponding information systems (IS) would it

need to develop? Provide specific examples of each component of the IS and how they support the business process.

4.

Continuing the response from #3 above, how would the brick

-and

-mortar retailer integr

ate its newly developed information

systems with Amazon's (To add depth to your answer, search the term "Amazon MWS" in any popular internet search browser).

5.

Lastly, what should UPS and FedEx be doing in response to Amazon's interest in drone delivey

y, it is hard to remember how much of what we take for granted was pioneered by Amazon. "Customers who bought th

is,

also bought that"; online customer reviews; customer ranking of customer reviews; books lists; Look Inside the Book; automati

c

ACCT3070

Management Information Systems | Group Presentation (5%): The Amazon of Innovation Case Study

Analysis

Page | 2

free shipping for certain orders or frequent customers; and Kindle books and devices were all novel concepts when Amazon

intr

oduced them.

Amazon's retailing business operates on very thin margins. Products are usually sold at a discount from the stated retail pri

ce,

and 2day shipping is free for Amazon Prime members (who pay an annual fee of $99). How does it do it? For one, Am

azon

drives its employees incredibly hard. Former employees claim the hours are long, the pressure is severe, and the workload is

heavy. But what else? It comes down to Moore's Law and the innovative use of nearly free data processing, storage, and

communi

cation.

2.

In addition to online retailing, Amazon also sells order fulfillment services. You can ship your inventory to an Amazon warehouse

and access Amazon's information systems just as if they were yours. Using technology known as Web Services, your orde

r

processing information systems can directly integrate, over the Web, with Amazon's inventory, fulfillment, and shipping

applications. Your customers need not know that Amazon played any role at all. You can also sell that same inventory using

Amazon's re

tail sales applications.

3.

Amazon Web Services (AWS) allow organizations to lease time on computer equipment in very flexible ways. Amazon's Elastic

Cloud 2 (EC2) enables organizations to expand and contract the computer resources they need within minutes. Amazon has a

variety of payment plans, and it is possible to buy computer time for less than a penny an hour. Key to this capability is the

ability for the leasing organization's computer programs to interface with Amazon's to automatically scale up and sc

ale down

the resources leased. For example, if a news site publishes a story that causes a rapid ramp

-up of traffic, that news site can,

programmatically, request, configure, and use more computing resources for an hour, a day, a month, whatever.

Sourc

e

: Data from Amazon.com, http://phx.corporateir.net/phoenix.zhtml?c=176060&p=irolcorporate Timeline (accessed July 2013)

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Management Information Systems | Group Presentation (5%): The Amazon of Innovation Case Study

Analysis

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With its Kindle devices, Amazon has become both a vendor of tablets and, even more importantly in the long term, a vendor of

online

music and video. And to induce customers to buy Kindle apps, in 2013 Amazon introduced its own currency, Amazon Coins. In

2014, Amazon opened a 3D printing store from which customers can customize their own toys, jewelry, dog bones, and dozens of

other pro

ducts. It also made a push to provide video services by introducing Fire TV. In 2015, Amazon introduced WorkMail, a

potential cloud

-based replacement for Microsoft Exchange. It also introduced Amazon Home Services (local professional services),

Amazon Des

tinations (travel site), and Amazon Dash (a one

-button reordering device). Finally, Jeff Bezos announced in 2014 that

Amazon was experimenting with package delivery using drones, a service called Prime Air. In March 2015, the U.S. Federal Avia

tion

Administ

ration gave Amazon permission to start

testing its drones in the United States. It seems likely drone delivery is something that will happen in the future given the

services

Amazon.com is currently offering.

Fulfillment by Amazon (FBA)

Fulfillment by Amazon (FBA) is an Amazon service by which other sellers can ship goods to Amazon warehouses for stocking, ord

er

packaging, and shipment. FBA customers pay a fee for the service as well as for inventory space. Amazon uses its own inventory

management and order fulfillment business processes and information systems to fulfill the FBA customers' orders.

FBA customers can sell their goods on Amazon.com, sell them via their own sales channels, or both. If the FBA cus

tomer sells on

Amazon.com, Amazon will provide customer service for order processing (handling returns, fixing erroneously packed orders,

answering customer order queries, and the like).

* Fulfillment by Amazon Fee Changes 2015," Amazon.com, accessed A

pril 30, 2015

, www.amazon.com/gp/help/customer/display.html/?nodeId=201119410

The costs for Fulfillment by Amazon depend on the type and size of the goods to be processed. The FBA fees for standard-

size

products as of February 2015 are shown in the above table.

If goods are sold via Amazon.com, Amazon uses its own information systems to drive the order fulfillment process. However, if

the

goods are sold via an FBA customer's sales channel, then the FBA customer must connect its own informatio

n systems with those at

Amazon. Amazon provides a standardized interface by which this is done called Amazon Marketplace Web Service (MWS). Using

Web

-standard technology (see Chapter 6), FBA customers' order and payment data are directly linked to Amazon's

information

systems.

FBA enables companies to outsource order fulfillment to Amazon, thus avoiding the cost of developing their own processes,

facilities, and information systems for this purpose.