Question

Perform a value chain cost analysis of Amazon

Answer 1

Value chain analysis is an analytical framework that assists in identifying business activities that can create value and competitive advantage to the business.

Amazon Primary Activities:-

=>Amazon Inbound logistics

Generally, Amazon does not have long-term contracts or arrangements with its vendors to guarantee the availability of merchandise, particular payment terms, or the extension of credit limits. Fulfilment by Amazon (FBA) is the cornerstone of Amazon inbound logistics for company-owned retail business. Sellers can also use FBA by stowing their inventory in Amazon fulfilment centres.

In this case, Amazon assumes full responsibility for logistics, customer service, and product returns. If a customer orders an FBA item and an Amazon owned-inventory item, the company ships both items to the customer in one box, as a significant gain of efficiency. The use of FBA is an optional choice for sellers and this choice makes the products of third-party sellers eligible for Amazon Prime free two-day shipping, free shipping and other benefits.

Amazon uses logistics beyond the point to serve Amazon Marketplace and starting from recently, the company has been offering logistics services to others. For example, Beijing Century Joyo Courier Services, an Amazon subsidiary registered with the U.S. government as an ocean shipping provider. From this point of view, efficient logistics infrastructure also belongs to the list of Amazon competitive advantages.