Case Study: The company Aof Innovation

Between Thanksgiving and Cyber MondayNovember 22, 2018, through November 26, 2018COMPANY A customers ordered more than 180 million items.31 That was a 20 percent gain over the previous year, when customers ordered 1,400 electronics per second from a mobile device. Those 180 million items included 18 million toys and 13 million fashion items. Some of the best-selling products included Echo Dot, AncestryDNA genetic testing kits, and Bose noise-canceling headphones. On its busiest day Company A packed and shipped millions of packages.

You may think of Compan A as simply an online retailer, and that is indeed where the company has achieved most of its success. To do this, Company A had to build an enormous supporting infrastructurejust imagine the information systems and fulfillment facilities needed to ship 36.8 million items on a single day. That infrastructure, however, is needed only during the busy holiday season. Most of the year, Company A is left with excess infrastructure capacity. Starting in 2000, Company A began to lease some of that capacity to other companies. In the process, it played a key role in the creation of what are termed cloud services, which you will learn about in Chapter 6. For now, just think of cloud services as computer resources somewhere out in the Internet that are leased on flexible terms.

Today, CompanyAs business lines can be grouped into three major categories: (1) Online retailing; (2) Order fulfillment; and (3) Cloud services.

Consider each:

1. CompanyA created the business model for online retailing. It began as an online bookstore, but every year since 1998 it has added new product categories. The company is involved in all aspects of online retailing. It sells its own inventory. It incentivizes you, via the Associates program, to sell its inventory as well. Or it will help you sell your inventory within its product pages or via one of its consignment venues. Online auctions are the major aspect of online sales in which Company A does not participate. It tried auctions in 1999, but it could never make inroads against eBay.

Today, it is hard to remember how much of what we take for granted was pioneered by Company A. Customers who bought this, also bought that; online customer reviews; customer ranking of customer reviews; books lists; Look Inside the Book; automatic free shipping for certain orders or frequent customers; and Kindle books and devices were all novel concepts when Company A introduced them.

Company As retailing business operates on very thin margins. Products are usually sold at a discount from the stated retail price, and 2-day shipping is free for Company A Prime members (who pay an annual fee of $99). How does it do it? For one, Company A drives its employees incredibly hard. Former employees claim the hours are long, the pressure is severe, and the workload is

With its Kindle devices, Company Ahas become both a vendor of tablets and, even more importantly in the long term, a vendor of online music and video. Company A Echo (Alexa-enabled ordering system) and Company A Dash (a one-button reordering device) have become two of CompanyAs top-selling products. In late 2016, Jeff Bezos announced the first package delivery by drone via Company A Prime Air in the UK.

But regulations have slowed its adoption in the United States. While drone delivery is something that will happen in the future, consider a service that Company A is offering right now. In mid-2017, Company A made news by acquiring grocery giant Whole Foods.

By 2018 CompanyA had opened its own automated grocery store named Company A Go, which didnt use cashiers or checkout terminals. Company As expansion into the traditional grocery store space drove speculation about how far Company As reach would extend.

Fulfillment by COMPANYA (FBA)

Fulfillment by Company A (FBA) is an Company A service by which other sellers can ship goods to Company A warehouses for stocking, order packaging, and shipment. FBA customers pay a fee for the service as well as for inventory space. Company A 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 Company A.com, sell them via their own sales channels, or both. If the FBA customer sells on Company A.com, Company A will provide customer service for order processing (handling returns, fixing erroneously packed orders, answering customer order queries, and the like).

The costs for Fulfillment by Company A depend on the type and size of the goods to be processed. The FBA fees for standard-size products can be found at this link: https://sell.Company A.com/pricing?ref_=sdus_soa_priov_n#fulfillment-fees.

If goods are sold via Company A.com, Company A uses its own information systems to drive the order fulfillment process. However, if the goods are sold via an FBA customers sales channel, then the FBA customer must connect its own information systems with those at Company A. Company A provides a standardized interface by which this is done called Company A Marketplace Web Service (MWS). Using Web-standard technology, FBA customers order and payment data are directly linked to Company As information systems.

FBA enables companies to outsource order fulfillment to Company A, thus avoiding the cost of developing their own processes, facilities, and information systems for this purpose.

Key Requirements

Together in your group please answer the following questions. Each group member must actively participate in answering and presenting the questions to earn their individual marks.

1. Based on the facts present in this case, what do you think is Company As competitive strategy? Why?
2. Create a business process document to be included in your presentation for the Fulfillment by Company A (FBA) process of one of Company As FBA customers. Make up the name of company. Use the appropriate process symbols.